How China is engineering Asia’s rise as the world’s leading EV factory

After years of rapid expansion, Chinese carmaker BYD saw sales fall for the first time in over five years in the third quarter of this year on an annual basis. Amid fierce competition at home, BYD’s vehicle sales in September alone fell by 5.5 per cent year on year. This comes after a 30 per cent profit drop in the second quarter. The company’s sales and profit drops reflect the fortunes of many other Chinese carmakers as domestic demand for electric vehicles slows. But what does this mean for Asia’s EV sector? For a start, it would be inaccurate to think of Asia’s EV industry in zero-sum terms. Asia’s EV future is not about one country outcompeting another. Rather, it is about integration, linkages, foreign investments, supply chain resilience, joint ventures and apolitical cooperation. This is in contrast to the drive to decouple in the West, reflected in the US and European stance of imposing protectionist tariffs to keep out Chinese EVs, which has disrupted the global market. In light of Asia’s EV dynamics – which are underpinned by pragmatism, interdependence and integration – BYD’s slowdown points to a recalibration rather than a retreat. Over the past few years, Chinese corporations such as BYD have become well integrated into Southeast Asian economies, establishing factories that produce EVs and car batteries in countries such as Indonesia and Thailand – showing how Chinese EV joint investments and component sourcing have ventured beyond China’s borders. Notable among the major Chinese investments is the US$6 billion project in Indonesia by Contemporary Amperex Technology (CATL), the world’s largest manufacturer of EV batteries, to build an integrated battery ecosystem – encompassing everything from nickel mining and processing to battery production and recycling. Symbiotic rather than confrontational, the collaboration makes the most of Indonesia’s raw materials and conducive regulations with Chinese battery design, expertise and software to build local capabilities. It plugs local companies such as miner PT Aneka Tambang and Indonesia Battery Corporation – partners in the CATL joint venture – firmly into the wider EV supplier networks, giving them access to accrued benefits such as lower production costs and supply chain integration. With the swift processing of critical materials such as nickel and the production of battery materials such as cathodes, Indonesia will be able to add value to the regional EV supply chain, creating jobs and exporting high-value products instead of raw materials. Indonesia’s case also points to how synergising development potential can materialise as venture partners merge capital with potential multiplier effects, materialising in construction, logistics, construction and technological know-how. Thailand, meanwhile, has approved a project worth over US$1 billion by China’s Sunwoda Electronic Company to produce EV and other batteries in the country’s Eastern Economic Corridor, giving Thailand a chance to become a major player in the EV value chain and upgrading its industrial role. Vietnam has also welcomed Chinese carmaker Chery’s investment to set up an US$800 million EV factory in its northern province of Thai Binh. Unlike in the US and Europe, the EV sector in Asia is developing rapidly on the back of numerous partnership agreements. Last month, Malaysian carmaker Proton, which is 49.9 per cent owned by China’s Zhejiang Geely Holding Group, launched its first EV assembly plant. This was significant on several levels. It reflected the Chinese commitment to invest in Malaysia’s manufacturing capacities to stimulate local innovation and generate local employment, aligned with Malaysia’s quest to become Southeast Asia’s hub for EV production. And it will help to build a more robust and resilient EV supply chain in the wider region against a backdrop of global economic uncertainty. As Chinese EV investments pour in, regional governments are readying their regulatory frameworks to provide more clarity – in stark contrast to the barriers put up in Western economies. Malaysia, for instance, is finalising a new mechanism aimed at providing a more transparent and attractive tax and incentive framework to support the development of its EV industry. Such efforts make clear the incentives for future Chinese EV investments and encourage Chinese commitments to invest in local ecosystems and develop local suppliers. With such state-level support, the future of Asia’s EV industry looks set to be defined by the binding of economies in the common pursuit of diversification, risk aversion and accruing mutual benefits. In other words, Asia’s EV future is being jointly handled in the growing number of factories beyond China’s borders. Clearly, Asia’s fast-growing EV industry will be less about petty rivalries and more about a symbiosis of strengths and capabilities – through Chinese leadership. Many Asian states continue to benefit from Chinese investments, enabling resource-rich countries in the region to benefit from domestic upscale integration. This, in turn, results in greater capital inflows and the requisite technological transfers for EV and battery production – building interdependence instead of decoupling. Chinese enterprises’ calm and measured pioneering of EV initiatives throughout Asia displays a maturity of manufacturing leadership. This stands in contrast to US President Donald Trump’s attempts to revive American manufacturing, which are characterised by populism, bellicose rhetoric, provocations and unilateral measures that weaken rather than reinforce market stability. Led by Chinese investments, Asia can expect a rosy EV future – conducive local ecosystems, a high degree of integration and interdependence in EV production, battery supply resilience and generous tech transfers. Indeed, the rise of Chinese EVs is paving the way for an Asia-wide EV manufacturing dominance.

How China is engineering Asia’s rise as the world’s leading EV factory

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Systematic Chinese investments and tech transfers are being embraced, especially in Southeast Asia, in contrast to Western decoupling efforts

Systematic Chinese investments and tech transfers are being embraced, especially in Southeast Asia, in contrast to Western decoupling efforts