China’s EV (electric vehicle) boom is making inroads in Southeast Asia, with the most prominent markets being Indonesia, Thailand, Malaysia, and Vietnam[i].

For a long time, EVs were considered a niche form of transport, given their specialization and cost-maintenance in a market oversaturated with hydrocarbon-powered cars[ii]. However, with the maturing Chinese EV supply chain and governmental incentives to go green in order to combat climate change, the cost and availability of EVs are starting to flourish in these emerging markets[iii].

China’s EV boom emerged relatively recently, but it was a long-term investment that started over a decade ago in 2009, with government subsidies and discouragement of hydrocarbon-usage [iv]. Given that competition in the fossil-fuel market was already oversaturated and that China’s own fossil-fuel cars were lagging behind, there was also an economic incentive to diverge from the fossil-fuel automobile industry into an unexploited niche[v]. At that time in the 2010s, the only notable EV brand was Tesla, so competition was relatively unopposed; fast forward to the present day, and Beijing has become the dominant maker in not only EVs but in production infrastructure, battery infrastructure, and novel EV technologies[vi]. EV brands such as BYD and XPeng, for example, have flourished outside of the Chinese market due to affordability thanks to ongoing government subsidies and the convenience of China’s mature and complex supply chains[vii]. Even Tesla relies on China for both its batteries and its large consumer base to turn a significant profit[viii].

For Beijing, expanding its EV brands is both an economic and geopolitical incentive. By expanding into these markets, China is binding nearly half of ASEAN closer into its orbit within the EV supply-consumer chain matrix, especially in the backdrop of US-China competition in the region as well as considering that more than half of the region’s EV demand stems from Thailand at 58.3%, Indonesia at 19.5%, Vietnam at 15.8% and Singapore at 3.8%, which are all major population centres in the region[ix]. For these ASEAN member-states, Chinese EVs serve as a cheap, cost-effective way of reducing reliance on fossil fuels and ensuring that states could better re-allocate resources to combat the encroaching effects of climate change. Island and coastal nations represent nearly all of ASEAN, with Southeast Asia being projected to be one of the hardest-hit regions due to the changing climate and rising sea levels[x]. Whilst Tesla is a famous and well-recognised brand in the region, it is also recognised as a brand often associated and priced for the upper class. Save for Singapore, all of ASEAN are either middle-income or below middle-income economies. BYD’s lower pricing and cooperation with CATL’s sophisticated battery supply chain infrastructure offer a more affordable way for middle-income families within ASEAN to afford an EV[xi], as even Australia acknowledges the importance of Beijing in price-cutting EVs to affordable levels[xii].

China is not only selling EVs to Southeast Asia. With EVs comes the necessary infrastructure to house charging stations and battery-swapping services. It is estimated that ASEAN may require total infrastructure investment of up to USD$2.8 trillion by 2030 to fuel their economic growth[xiii]. Beijing is a leader in EVs and would most likely use its Belt and Road Initiative (BRI) as its main platform to accelerate ASEAN’s booming infrastructure [xiv]. In contrast, the United States lacks existing plans to compete with China on the same scale or efficiency. As aforementioned, even Tesla relies on CATL for its battery performance. So either way, competition between Tesla and Chinese EV brands would still be a win for Beijing’s strategic partnership with Southeast Asia. Moreover, geopolitically, ASEAN lacks the levels of political cohesion that would threaten Chinese EVs vis-à-vis the EU’s ongoing dispute over Chinese EV price-cutting[xv], allowing Beijing even further opportunities to court bilateral relations with the member-states of ASEAN.

On a long-term, grand strategic scale, China’s EV push into Southeast Asia represents a losing challenge for Washington. It is clear that EVs will dominate the long-term mode of transportation within Southeast Asia and that China holds all the cards to mature its EV infrastructure further. Meanwhile, the only American company that could compete with the likes of BYD is Tesla, which depends on CATL and whose CEO, Elon Musk, is known controversially for his incredibly close ties with Beijing[xvi]. Hence, even if Biden’s Build Back Better would have some success within the EV domain, by the time it becomes note-worthy, Washington’s attempts to counter China’s green technology would have been too little, too late, as they would arrive in an oversaturated and Chinese-dominated market.

Endnotes

[i] Yang, Zeyi. “How Did China Come to Dominate the World of Electric Cars?” MIT Technology Review , February 21, 2023. https://www.technologyreview.com/2023/02/21/1068880/how-did-china-dominate-electric-cars-policy/

[ii] Flowers, Simon. “How Electric Cars Will Move from Niche to Disruptor.” Wood Mackenzie, January 13, 2022. https://www.woodmac.com/news/the-edge/how-electric-cars-will-move-from-niche-to-disruptor/.

[iii] “Planning for EV Infrastructure in Asia.” Asian Insiders, n.d. https://asianinsiders.com/2023/11/02/planning-for-ev-infrastructure-in-asia/.

[iv] Yang, Zeyi.

[v] Ibid.

[vi] Gargeyas, Arjun. “The Effect of China’s EV Dominance on the Global Automotive Sector .” Hinrich Foundation, November 28, 2023. https://www.hinrichfoundation.com/research/article/tech/effect-of-china-ev-dominance/.

[vii] Ibid.                                                      

[viii] “Tesla Relies on China for 40% of Battery Supply Chain: Analysis.” Nikkei Asia, August 9, 2023. https://asia.nikkei.com/Business/Automobiles/Tesla-relies-on-China-for-40-of-battery-supply-chain-analysis

[ix] Teja, Natasha. “South-East Asia’s EV Investment Race.” FDI Intelligence, October 27, 2023. https://www.fdiintelligence.com/content/feature/southeast-asias-ev-investment-race-83011

[x] Melsom, Lachlan. “Southeast Asian Climate Threats Are Australia’s Concern.” Perth USAsia Centre, n.d. https://perthusasia.edu.au/research-insights/southeast-asian-climate-threats-are-australias-concern/.

[xi] Russell, Clyde. “China’s EV Strategy of Going Small and Cheap to Pay Big Dividends in Asia.” Reuters, April 23, 2024. https://www.reuters.com/world/china/chinas-ev-strategy-going-small-cheap-pay-big-dividends-asia-russell-2024-04-23/

[xii] Hagon, Toby. When will EV prices be the same as non-electric cars?, November 2, 2023. https://rac.com.au/car-motoring/info/when-will-electric-cars-be-cheaper.

[xiii] Wei, Nancy. “Voltage Visions: China’s EV Surge in Southeast Asia ,” March 2, 2024. https://thediplomat.com/2024/03/voltage-visions-chinas-ev-surge-in-southeast-asia/

[xiv] Ibid.

[xv] Ibid.

[xvi] Porter, Tom. “Elon Musk Got Special Favors and Access from China That Could Leave Him Exposed, Report Says.” Business Insider, March 27, 2024. https://www.businessinsider.com/elon-musk-china-favors-leave-him-exposed-nyt-2024-3