Dr. Shaoshan Liu is the founder/CEO of PerceptIn, Autonomous Mobile Clinics project lead at BeyonCa, and Asia Chair of IEEE Entrepreneurship
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The Association of Southeast Asian Nations (ASEAN) consists of 10 member states, including two developed countries (Brunei and Singapore), five developing countries (Malaysia, Indonesia, Thailand, Philippines and Vietnam) and three least-developed countries (Cambodia, Laos and Myanmar). Despite its current economic situation, ASEAN consists of 8.58% of the world’s population, and its economic growth outpaces the world’s economic growth.
Although the U.S. and China are leading the global electric vehicle (EV) industry today, through analyzing ASEAN’s economic and political situation, I believe that ASEAN will become the next frontier of the global intelligent electric vehicle industry.
We have observed tremendous growth in the global intelligent EV market in the past few years. In 2021, EV sales represented 9% of all passenger vehicle sales. The main drivers in this emerging market mainly come from the U.S. and China automotive OEMs, with the U.S.’s Tesla owning 21% of the battery-electric EV market and China’s SAIC owning 13% and BYD owning 7%.
On the consumption side, China and the U.S. are major EV markets; thus, most EVs manufactured in the U.S. and China can be consumed locally. On the supply side, both China and the U.S. have advanced manufacturing capabilities and have established global supply chains. On the infrastructure side, China and the U.S. have provided significant incentives to boost the development of the EV industry.
However, it might be increasingly challenging today for Chinese EV OEMs to take market shares of the U.S. and European markets and vice versa. Even worse, constraints on key components such as batteries and electronic control units (ECUs) may impose challenges on the supply side of EV products.
Given the geopolitical situation, ASEAN might be a new frontier for the intelligent EV industry. The union has thus far stayed neutral amid current U.S.-China relations, does not have to face the challenges of sourcing essential components throughout the world and does not have to worry about shipping its products to other parts of the world. These reasons make ASEAN a great region to produce EVs for the whole global market. But is it ready to take lead in the emerging intelligent EV industry?
First, let us examine the consumption side. After all, a strong local market serves as the basis for incubating a new industry. In the past decade, ASEAN countries have experienced rapid economic development. Recently, many European and U.S. businesses have migrated from China to ASEAN countries, giving a boost to ASEAN foreign direct investment (FDI), which will eventually lead to an improvement in buying power.
Especially exemplified by the recent VinFast success story, it has become clear that there exists a great potential EV market in ASEAN and that it would benefit from its own EV brand.
Second, on the supply side, there are four key components in intelligent EV manufacturing: software and artificial intelligence (AI) talents, batteries, ECUs and manufacturing capabilities. ASEAN as a whole actually has all these components ready.
Singapore, powered by its superior university and R&D systems, has been a software and AI talent powerhouse. Indonesia is extremely rich in natural reserves of nickel and cobalt, which are essential battery materials, making Indonesia a highly competitive battery supplier.
In the past two decades, Malaysia has positioned itself as a major semiconductor manufacturer in the global semiconductor supply chain, especially in the automotive ECU space. Last but not least, with manufacturing plants of Toyota, Isuzu, Honda, Nissan, General Motors, Ford Motor and others, the automotive industry in Thailand is the largest in Southeast Asia and is ready for EV manufacturing.
Third, on the infrastructure side, numerous studies have concluded that insufficient charging infrastructure has been the main reason why ASEAN consumers are not choosing EVs. For instance, there are only 187 units of charging stations throughout Indonesia, compared to over 1.15 million charging poles in China.
To boost the development of the intelligent EV industry in ASEAN, its governments should consider following the footsteps of China and the U.S. to invest in the charging infrastructure and provide incentives for people to switch from gasoline-powered vehicles to EVs.
Fourth, while building the intelligent EV ecosystem in ASEAN, many innovations and business opportunities will arise along with the ecosystem. For instance, new in-car entertainment applications will arise along with the EV industry. Particularly in the past few years, numerous highly successful startups, such as Grab, Sea, Jobstreet and Go-Jek, have emerged in ASEAN, gradually cultivating an entrepreneurship culture within the region.
The ASEAN government should invest in incubating startups around the intelligent EV ecosystem to solidify its global leadership position in this industry. China has achieved it in the mobile internet era, so perhaps it is ASEAN’s turn in the intelligent EV era.
Major automotive OEMs around the world may also consider investing in ASEAN to capture this once-in-decades market opportunity. Many companies are already investing in ASEAN to secure resources and market share. The latest examples are China’s BYD investing in Indonesia to secure battery supplies and China’s NIO making a push to penetrate the ASEAN market.
Due to its recent rapid economic growth, ready supply chain and the current geopolitical situation, I believe ASEAN is poised to become the next frontier of the intelligent EV industry. To incubate this emerging industry, the ASEAN governments should invest in charging infrastructure and encourage entrepreneurship.
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