Chinese electric vehicle (EV) makers are turning to Southeast Asia as tariffs in Europe and the US restrict market access. The US imposed 100% tariffs on Chinese-made EVs in May, followed by the European Union (EU) imposing tariffs of up to 38% on China’s three largest EV makers (SAIC, Geely and BYD) from July 4. These measures stem from concerns over Beijing’s subsidies, which the EU claims are undermining fair competition.
Faced with limited opportunities in Western markets, Chinese automakers are pivoting to Southeast Asia, where the EV market is growing rapidly and expected to reach $100 billion by 2035. Gary Ng, senior economist at Natixis Corporate and Investment Bank, highlights the region’s relatively neutral geopolitical status as a key factor in this shift. “Southeast Asia’s relatively neutral geopolitical status provides Chinese companies with an opportunity to expand their business,” he told the South China Morning Post.
Strategic Investments and Market Potential
Leading Chinese EV manufacturers, including BYD, Xpeng and Geely, are investing heavily in Indonesia, Thailand and Malaysia. These investments are aimed at capturing a larger share of Southeast Asia’s emerging sustainable vehicle market. According to an EY-Parthenon report, the EV market in Southeast Asia is expected to grow from $2 billion in 2021 to $80-100 billion by 2035. Indonesia is expected to be the largest market in the region with expected sales of 4.5 million units by 2035.
Chinese EV makers are already making strides in these markets: BYD plans to build a $1 billion factory in West Java, scheduled to start operations in 2026. Neta Auto has partnered with Handal Indonesia Motor to produce EV models locally. In Malaysia, Geely is investing more than $10 billion in developing a manufacturing facility with local subsidiary Proton, aiming to make Tanjung Malim a major auto hub.
Price competition and consumer challenges
Despite the promising market potential, Chinese automakers face big challenges, especially on the price front. Many Southeast Asian consumers have tight budgets, which could lead to increased price wars among EV manufacturers. This was evident when Neta unveiled its V-II model at the Jakarta EV show, priced at $12,100, 60 times the average monthly salary in Indonesia.
In Malaysia, only expensive imported EVs can be sold due to high market entry barriers — the cheapest EV, the BYD Dolphin, costs $21,200, well above the average price of a locally produced car. Jigar Shah, head of sustainability research at Maybank Investment Banking Group, said EV prices would have to come down significantly to attract Malaysian buyers.
Amid these pricing challenges, Chinese EV makers could trigger a price war similar to that seen between Chinese motorcycle makers in the early 2000s. Jiayu Li, a senior associate at Global Counsel, warned that fierce price competition could lead to cost-cutting and lower product quality, allowing incumbent brands to reclaim market share.
Long-term growth prospects
Despite these obstacles, the long-term growth prospects for Chinese EV makers in Southeast Asia remain promising. A growing middle class and growing environmental awareness in the region are driving demand for cleaner vehicles. Local governments are also stepping up support for EV production. Indonesia, for example, plans to leverage its abundant nickel reserves to increase domestic EV production to 600,000 units by 2030.
“Southeast Asia is a booming market and there is huge growth potential for Chinese companies as there are no restrictions on access to this market,” Wang Yancheng, managing director of market intelligence firm Shanghai Metal Market, told the South China Morning Post.
As Chinese EV makers navigate the complexities of pricing and consumer preferences, their strategic investments and local production efforts are likely to pay off, making Southeast Asia a key battleground in the global EV market.
Faced with limited opportunities in Western markets, Chinese automakers are pivoting to Southeast Asia, where the EV market is growing rapidly and expected to reach $100 billion by 2035. Gary Ng, senior economist at Natixis Corporate and Investment Bank, highlights the region’s relatively neutral geopolitical status as a key factor in this shift. “Southeast Asia’s relatively neutral geopolitical status provides Chinese companies with an opportunity to expand their business,” he told the South China Morning Post.
Strategic Investments and Market Potential
Leading Chinese EV manufacturers, including BYD, Xpeng and Geely, are investing heavily in Indonesia, Thailand and Malaysia. These investments are aimed at capturing a larger share of Southeast Asia’s emerging sustainable vehicle market. According to an EY-Parthenon report, the EV market in Southeast Asia is expected to grow from $2 billion in 2021 to $80-100 billion by 2035. Indonesia is expected to be the largest market in the region with expected sales of 4.5 million units by 2035.
Chinese EV makers are already making strides in these markets: BYD plans to build a $1 billion factory in West Java, scheduled to start operations in 2026. Neta Auto has partnered with Handal Indonesia Motor to produce EV models locally. In Malaysia, Geely is investing more than $10 billion in developing a manufacturing facility with local subsidiary Proton, aiming to make Tanjung Malim a major auto hub.
Price competition and consumer challenges
Despite the promising market potential, Chinese automakers face big challenges, especially on the price front. Many Southeast Asian consumers have tight budgets, which could lead to increased price wars among EV manufacturers. This was evident when Neta unveiled its V-II model at the Jakarta EV show, priced at $12,100, 60 times the average monthly salary in Indonesia.
In Malaysia, only expensive imported EVs can be sold due to high market entry barriers — the cheapest EV, the BYD Dolphin, costs $21,200, well above the average price of a locally produced car. Jigar Shah, head of sustainability research at Maybank Investment Banking Group, said EV prices would have to come down significantly to attract Malaysian buyers.
Amid these pricing challenges, Chinese EV makers could trigger a price war similar to that seen between Chinese motorcycle makers in the early 2000s. Jiayu Li, a senior associate at Global Counsel, warned that fierce price competition could lead to cost-cutting and lower product quality, allowing incumbent brands to reclaim market share.
Long-term growth prospects
Despite these obstacles, the long-term growth prospects for Chinese EV makers in Southeast Asia remain promising. A growing middle class and growing environmental awareness in the region are driving demand for cleaner vehicles. Local governments are also stepping up support for EV production. Indonesia, for example, plans to leverage its abundant nickel reserves to increase domestic EV production to 600,000 units by 2030.
“Southeast Asia is a booming market and there is huge growth potential for Chinese companies as there are no restrictions on access to this market,” Wang Yancheng, managing director of market intelligence firm Shanghai Metal Market, told the South China Morning Post.
As Chinese EV makers navigate the complexities of pricing and consumer preferences, their strategic investments and local production efforts are likely to pay off, making Southeast Asia a key battleground in the global EV market.
