The electric vehicle (EV) industry is set to invest an estimated $20 billion across South and Southeast Asia (SSEA) as automakers expand their presence in response to anticipated demand growth. A recent report by S&P Global Ratings projects annual EV sales in the region to increase by more than 20% from 2024 to 2026, driven by government incentives and a broader range of EV models.
Chinese automakers, in particular, are enhancing their production capacity within SSEA, aiming to capture market share among first-time car buyers who prioritize cost-effective options. The report notes that this expansion could mitigate certain financial risks for these companies, although it may create challenges for Japanese automakers, who currently have a stronghold in the internal combustion and hybrid sectors.
In Indonesia, South Korean automakers have also initiated partnerships to establish EV production plants, including collaborations with LG Energy Solution Ltd. for local battery cell manufacturing. These developments aim to create a comprehensive EV supply ecosystem within the country, with production facilities positioned to serve the broader SSEA market. Indonesia is anticipated to play a significant role as a production center in the region’s growing EV landscape.
India’s EV sector continues its upward trajectory, led by Tata Motors, which is targeting an 18–20% market share in the passenger EV market by 2030. Tata Motors has committed $1 billion to set up a new EV manufacturing plant in Tamil Nadu, while Tata Sons is backing a lithium-ion battery plant with a planned capacity of 20 gigawatt-hours in Gujarat. This facility is intended to support the EV infrastructure within India.
The SSEA EV market is expected to witness increased competition as more global automakers enter the region, potentially leading to price wars and oversupply, trends similar to those observed in China. According to the report, automakers will need to remain financially cautious and develop strategic local alliances to manage the risks associated with the region’s rapid growth as an EV production and sales hub.