Developing an electric vehicle (EV) industry in South and Southeast Asia will require significant investment, with S&P Global Ratings estimating more than US$20 billion in spending by rated carmakers over the next few years.
Chinese EV manufacturers are expected to lead the expansion, viewing the region as a key growth market and a strategic hub for exporting to Europe, where Chinese-made EVs face high import tariffs.
S&P Global Ratings credit analyst Claire Yuan noted that investments in the region will bolster business strength for certain rated entities, though cross-border execution risks and shifting policies will pose challenges.
Japanese automakers are likely to focus on hybrid and internal combustion engine (ICE) vehicles, given their established market share in these categories and the region’s limited charging infrastructure. Toyota and Honda are leveraging their hybrid expertise to address a range of anxiety concerns among local consumers.
Meanwhile, Korean manufacturers are adopting a flexible approach, scaling up EV and hybrid production capacity in response to market dynamics.
According to Yuan, firms will share the financial burden of these investments with regional partners, with less than 15% of the combined total capital expenditure allocated to South and Southeast Asia’s EV industry over the coming years.