Will the Southeast Asian electric vehicle market be the next battlefield for Chinese brands?

Counterpoint Research stated on June 21 that the sales of electric vehicles (EVs), represented by China's BYD and Vietnam's VinFast, are skyrocketing in Southeast Asia, sweeping the internal combustion engine car market dominated by Japan and Korea. According to the research firm, in the first quarter of this year, the sales of electrified cars in the region increased by more than double compared to the same period last year. Meanwhile, sales of internal combustion engine cars dropped by 7%.

Chinese electric car brands are sweeping Southeast Asia, with 75% of electric cars sold in Southeast Asia in the first quarter of last year produced by Chinese car manufacturers. According to Counterpoint analyst Abhik Mukherjee, "This is because Japanese and Korean car manufacturers, who dominate in traditional car sales, are lagging behind in the popularization of electric cars. Chinese OEMs are filling this gap. More than 70% of electric car sales in the region come from Chinese brands, with BYD leading the way.

China's BYD's sales in Vietnam exceeded its own brand Vinfast, reflecting the growing influence of Chinese car brands in Southeast Asia. The research company said, "The growth in Vietnam is more surprising, with BEV sales increasing by over 400%, accounting for nearly 17% of sales in the region." In Vietnam, China's best-selling electric car manufacturer BYD maintains a leading position, occupying 47% of the market share in the region, followed by Vietnam's own brand, VinFast.

Many Southeast Asian countries, including Thailand and Indonesia, are supportive of electrified cars and have introduced incentive measures to stimulate demand for electric cars. This provides an excellent growth point and expansion opportunity for car brands that are mired in intense competition in China, where BYD has achieved early success in Southeast Asia through distribution partnerships established with local large enterprise groups. Despite the great success of Chinese electric car brands in Southeast Asia, they also face some challenges, such as competition from traditional car companies like Japan and Korea, insufficient infrastructure, and low consumer awareness.

The trend of Chinese automobile brands expanding in Southeast Asia has already formed, but compared to other regions, the scale of the electric vehicle market in Southeast Asia is still small. Faced with new tariff policies from developed countries such as the EU and the United States, Chinese automobile brands need to work harder to go global, including by adopting compliant operations that comply with the local market or offshore supply chain to avoid tariffs.