Automotive Disruption Radar: Thailand And Indonesia Poised To Be Electric Vehicles (EV) Ecosystem Hubs In South East Asia

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Thailand and Indonesia are positioned to become an EV ecosystem hub in South East Asia, according to Roland Berger’s 10th edition Automotive Disruption Radar (ADR).

26 November 2021, Source: Roland Berger

Thailand Is Accelerating EV Growth By Putting In Place Enabling Infrastructure And Favourable Policies

The Thai government’s National Electric Vehicle Policy Committee had set the new electric vehicle (EV) policy in March 2021, which provides clear emphasis on Zero-Emission Vehicles (ZEVs). This announcement is designed to enable 50 percent of vehicles produced in Thailand to be ZEVs by the end of this decade and 100 percent by 2035. Recently, Thai Prime Minister Prayut Chan-o-cha had reiterated this ambitious goal at the 2021 United Nations Climate Change Conference (COP26) in Glasgow, Scotland.

The Thai government’s commitment to promoting ZEVs has sparked interest among industry players, with a rife talk on potential investment on EV-related joint-ventures and plant investments. Most recently, the Taiwanese electronics firm, Foxconn announced plans to produce up to 200,000 EVs in Thailand annually, in a joint venture with Thai-based gas and petroleum business company, PTT Public Company Limited, to start in 2023-24.

Indonesian EV Regulations Have Attracted Industry Players

The Indonesian government has announced a national strategy with targets to achieve 2.2 million electric cars and 13 million electric bikes on the road by 2030.

The country is slated to benefit from USD 1 billion worth of investment following plans by Hyundai Motor and LG Energy Solutions to build a battery cell manufacturing site with 10 GWh capacity in Karawang. The plant is due to open in the first half of 2024 and aims to leverage Indonesia’s significant raw material resources, especially nickel.

In the electric two-wheeler segment, Gojek and Gogoro in cooperation with Pertamina will conduct a pilot of 4 battery swapping and 250 electric scooters in Jakarta, with an eventual scale of up to 5000 units.

“Keen industry interest and activities are a clear signal that Thailand and Indonesia would be very interesting to watch in their journey towards automotive and transportation electrification and transformation,” said Udomkiat Bunworasate, partner of Roland Berger South East Asia.

On the demand side though, customers are showing strong interest to purchase EVs. In general, short-distance car trips are the main reason for wanting to buy an EV, and action for the environment comes second. Interestingly, the environment was not a key concern based on the ADR survey results in 2020.

Based on the latest ADR survey, 80 percent of Thai respondents and 75 percent of Indonesian respondents indicated interest to purchase a battery electric vehicle as their next car. Thai and Indonesian consumers also scored higher than the global average in listing short-distance car trips and action for the environment as the two top reasons for wanting to buy an EV.

Key concerns in both countries were also in line with global respondents, who were mainly deterred from purchasing an EV due to the higher price tag compared to internal combustion engine (ICE) cars and limited availability of charging facilities.

“On the supply side, key EV ecosystem players such as OEMs, parts suppliers, charging infrastructure operators are weighing investment risks and long-term business viability due to current low demand volume. Much still needs to be done by policymakers, industry stakeholders to jointly address current pain points and put in place necessary enablers to stimulate and accelerate EV growth in Indonesia,” said Timothy Wong, Roland Berger South East Asia’s principal focusing on the automotive industry.

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Featured photo credit: Ilya Plekhanov – Own work, CC BY-SA 3.0

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