In fact, the value of EV sales across ASEAN-6 (comprising Singapore, Malaysia, Indonesia, the Philippines, Thailand and Vietnam) is expected to hit a high of US$80 billion to US$100 billion by 2035 – at least a 40-fold jump from about US$2 billion in 2021. For example, Chinese EV company BYD, which has made significant inroads in Southeast Asia, saw its sales surge by 83 per cent in Singapore in the first half of 2024 compared with total sales in 2023. Its cars also made up 40 per cent of Thailand’s EV sales in 2023.

The accelerated adoption signals a promising journey ahead for investors looking to capitalise on the region’s expanding EV sector and other related industries. Still, investors will need to do their homework on each country’s regulatory environment, market readiness and infrastructure development.

Driving the future

The global effort to cut carbon emissions is fuelling the electrification of the transport sector, which accounts for about a quarter of greenhouse gas emissions. Countries and corporations worldwide have pledged their cooperation, and Southeast Asia is no exception.

Governments have set firm commitments to the cause and made significant strides towards realising their national goals. On home ground, part of the Singapore Green Plan 2030 includes fully phasing out internal combustion engine (ICE) vehicles by 2040, and Singapore is actively expanding its infrastructure to support this transition. Currently, about half of all HDB towns have at least one charging point, and the Land Transport Authority is on track to install stations across all of them by the end of 2025.

Singapore’s neighbours are working to fulfil equally ambitious goals by 2030: Thailand wants 30 per cent of all locally manufactured vehicles to be zero-emission; Malaysia aims to have EVs account for 15 per cent of all vehicles sold; and Indonesia plans to have two million electric cars on the road, which currently make up only 1 per cent of its about 17 million cars.

Riding on hype?

Some may wonder if these are lofty goals for a fledgling market that has been seen as lagging in the EV game. Just two years ago, in 2022, EVs accounted for a little under 2 per cent of the region’s total passenger vehicle sales.

Part of the reason is simply that EVs remain unaffordable for the average consumer in Southeast Asia compared to their ICE counterparts, with entry prices that start at around US$20,000.

What’s more, many countries still lack the necessary charging infrastructure to support their EV growth goals, slowing its adoption rate. A study by McKinsey estimates that ASEAN markets will need about 30 times the number of charging points they currently have to hit their forecast numbers by 2030.

However, the EV trend could prove to be more than just hype. ASEAN countries are setting up supply chains and racing to become EV manufacturing hubs, offering a path to increased affordability and demand. This is especially so for Thailand and Indonesia, which are sweetening the deal with government incentives.

For example, Indonesia has introduced tax breaks for those who buy locally produced or imported EVs to stimulate demand and, hopefully, attract foreign investment in its EV production facilities. This will bolster government plans to produce 600,000 EVs domestically by 2030, more than the total number of cars sold in the first half of 2024.

Similarly, Thailand has slashed excise tax from 8 to 2 per cent for electric cars worth up to 2 million baht (approximately US$58,000). Both countries are off to a good start, having attracted big players like BYD to set up manufacturing plants. BYD’s plant in Thailand, the automaker’s first in the region, can manufacture 150,000 EV units annually.

Gearing up investments

So what opportunities do these trends offer investors? Some choose to invest directly in automaker stocks, including BYD and Hyundai (listed on the Hong Kong Stock Exchange and Korea Exchange respectively), or the more premium Chinese EV maker Nio, which successfully listed on the Singapore Exchange mainboard in 2022. Regional companies like Vietnam’s homegrown EV maker VinFast have also seen an uptick in value after it was listed on the Nasdaq last year.

Other investors look out for component manufacturers in the EV value chain to diversify their portfolio. The urgent need for the region to catch up on its infrastructure means developing more charging networks. One example is Malaysian charging point operator ChargeSini, which lets individual investors purchase and own its charging stations at specific locations.

Investment opportunities extend to sectors even further up the supply chain, such as the raw materials needed in EV manufacturing.

Take Indonesia, for example, which has the world’s largest nickel reserves, a component essential in EV battery production. Its nickel export value has surged from US$1 billion in 2014 to US$32 billion in 2022. Chinese battery manufacturing company CATL has also committed US$6 billion worth of investments in nickel mining and processing, as well as battery manufacturing and recycling in 2022.

Southeast Asia might have been a latecomer to the EV trend, but it is fast making up for lost ground. The region’s rapidly developing EV ecosystem will create exciting opportunities for both investors and businesses alike.