Thailand and Indonesia lead Southeast Asia’s EV shift

The automotive industry is changing as it charges up electric vehicles. In Southeast Asia, the leading vehicle-producing regions, Thailand and Indonesia, are embracing this gear shift and developing new strategies to maintain and even improve their position in the road to electrification.

Writing in the International Journal of Automotive Technology and Management, Martin Schröder of Ritsumeikan University in Osaka, Japan, discusses this transition from the fossil-fuel powered internal combustion engine to the electric motor and how it is changing not only the automotive industry radically, but the value chains that exist around it.

Moreover, ironically enough, it is sparking new industrial dynamics, with new opportunities and challenges. How, these strategies move forward will redefine the competitive edge of this region.

Until recently, vehicle manufacture has had global spread. Where developing nations could change lanes and become major players in the market and even find themselves in pole position, as may well be the case with Thailand and Indonesia, among the wider producers of the region.

Indeed, they had already geared up to commodified production processes that allow for standardized manufacturing methods. Now, the boom in electric vehicle production is disrupting the landscape because it requires different technologies that were not previously part of automotive manufacture, such as lithium-ion batteries.

The work points out that Thailand is perhaps taking a more conservative approach based on its existing strengths and working with vehicle manufacturers elsewhere. However, pressure from Chinese manufacturers is forcing it to rethink its conservative approach.

In contrast, Indonesia has taken a less conventional route. It has built on its abundant nickel reserves, a critical material in battery production, to underpin its electric vehicle industry. Indonesia has this managed to establish itself as a key supplier for Southeast Asia.

The contrasting approaches of Thailand and Indonesia show how industrial policies can either reinforce or redefine a country’s position in the global automotive landscape. The research could thus help policymakers elsewhere understand how to drive forward their manufacturing sectors in this area and participate in the global electric vehicle market.