Key facts
- Chinese automakers are bypassing local parts suppliers in Southeast Asia.
- Local manufacturers face declining demand for internal combustion engine parts.
- Passenger EV sales in Southeast Asia reached 153,500 units in 2023.
- Thailand led EV sales with 86,400 units in 2023.
- The Thai Industry Ministry requested Chinese EV makers use 40% local parts.
Southeast Asia's burgeoning electric vehicle (EV) market is presenting challenges for local car parts suppliers, as major Chinese automakers increasingly opt for imported components and established supply chains. This trend leaves regional manufacturers struggling with both declining demand for traditional internal combustion engine (ICE) vehicle parts and high barriers to entry in the EV sector.
Passenger EV sales across six Southeast Asian nations more than tripled in 2023, reaching 153,500 units, with Thailand leading the surge. Favorable government policies and the significant presence of Chinese automakers have fueled this growth. However, despite this expansion, ICE vehicles are still projected to constitute 76% of the region's fleet by 2040, highlighting the ongoing need for stronger government initiatives to meet net-zero targets.
In response, the Thai Industry Ministry has urged Chinese EV manufacturers to incorporate at least 40% of locally sourced parts into their vehicles to bolster the domestic automotive supply chain. Companies like GAC Aion New Energy Automobile have committed to this threshold, while others, including Changan Automobile and Neta, are in discussions to increase their local content.