Major automakers are aggressively expanding their presence in South and Southeast Asia (SSEA), recognizing the region's immense potential as both a market and production hub, S&P said.
30 Oct 2024 | 2630 Views | By Autocar Professional Bureau
Supportive policies and expanded product offerings are expected to drive over 20% compound annual growth in electric vehicle sales across major South and Southeast Asian markets from 2024 to 2026, according to a recent report by S&P Global Ratings. The ratings agency estimates rated carmakers will be spending more than ...
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Supportive policies and expanded product offerings are expected to drive over 20% compound annual growth in electric vehicle sales across major South and Southeast Asian markets from 2024 to 2026, according to a recent report by S&P Global Ratings. The ratings agency estimates rated carmakers will be spending more than US$20 billion on EV production in this region for the next few years.
As Chinese carmakers expand and build capacity in the EV market, their business opportunities are likely to outweigh the associated financial risks, the report said. At the same time, although Japanese carmakers face a gradual loss of market share to EV competitors, their strength in internal combustion engines and hybrid vehicles will continue to support their leading sales position in the region over the next three to five years.
Chinese EV manufacturers are positioning themselves to capture a significant portion of the SSEA market. The region's large population of first-time car buyers, who typically prioritize affordability over brand recognition, presents an attractive opportunity for these manufacturers to establish their presence.
According to the report, Korean automakers are making substantial inroads into Indonesia, establishing EV production facilities through strategic partnerships. A notable collaboration with LG Energy Solution Ltd. for battery cell production highlights their commitment to creating a comprehensive EV ecosystem. These Indonesian facilities are positioned to serve as a crucial production center for the broader SSEA market.
India's Growing EV Market
The Indian EV sector is witnessing rapid transformation, with domestic player Tata Motors leading the charge, the report said. As India's third-largest carmaker, Tata Motors has set ambitious goals, targeting 18-20% market share in passenger vehicles by fiscal 2030. The company's commitment to the EV sector is evident in its recent announcement of a US$1 billion investment in a new EV plant in Tamil Nadu.
Tata Sons, the parent company, is furthering its EV commitment by investing in a lithium-ion battery plant in Gujarat. With an initial capacity of 20 gigawatt hours, this facility aims to bolster the local EV supply chain infrastructure.
The SSEA region is emerging as both a growth market and testing ground for global EV manufacturers. While the market potential is significant, industry experts anticipate intense competition over the next three to five years, possibly leading to supply surplus and price wars similar to those previously seen in China.
Looking Ahead
As the EV landscape in SSEA continues to evolve, manufacturers are expected to maintain financial discipline while leveraging local partnerships to manage expansion risks, according to the report. The region's transformation into a major EV hub appears inevitable, though the path may involve significant competitive challenges for all players involved.
The unfolding scenario in SSEA's EV market represents a crucial phase in the global automotive industry's transition to electric mobility, with potential winners and losers emerging as the market matures.