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Thailand, Indonesia, Malaysia, Vietnam race to become Southeast Asia’s electric car center

In Vietnam, the Government and National Assembly have issued preferential policies for electric vehicles.

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The Thai government has officially approved an incentive package to promote the production and use of electric vehicles in this country. The program will last until 2025, with the goal that by 2030 electric vehicle production will account for 30% of total car production.

Under this program, measures will be taken to encourage Thai consumers to widely use electric vehicles, through tax breaks and subsidies. The Thai government will cut luxury and import taxes on electric vehicles as well as subsidize prices from 70,000 baht (more than US$2,000) to 150,000 baht (nearly $5,000), depending on the type and model of electric vehicle. Along with that, a significant reduction in import duties on electronic parts vital to the production of electric vehicles will be implemented.

The Thai government said it will spend 40 billion baht between 2023 and 2025 to promote the use of electric vehicles.

Thailand is a top investment target for Chinese car companies. SAIC Motor's factory in Chonburi has been operating since 2017, producing MG-branded cars, and in the near future will produce electric vehicles. Great Wall Motor acquired General Motor's factory in Rayong and plans to produce electric vehicles from 2023. Other brands such as Chery, Dongfeng, Geely and Changan also plan to manufacture electric vehicles in Thailand.

Many new car brands of china such as XPeng, NIO, Li Auto also want to invest in building factories to produce new energy cars or components in Thailand.

The Indonesian government has issued the "EV Roadmap", announcing incentive policies to attract investment in the electric vehicle industry. Accordingly, electric vehicles will be exempt from luxury tax and import tax, while buyers will be able to pay in installments with low interest rates. Electric vehicle owners are also allowed to increase household electricity consumption with a high discount fee, and many inter-industry incentives.

These Chinese auto companies, in addition to investing in Thailand, are also heading to Indonesia. Indonesia has the world's largest reserves of nickel - an important raw material for the production of batteries. In January 2022, a number of Taiwanese companies, led by Foxconn, announced an investment of $8 billion to support Indonesia in developing a new energy eco-system, including automobile manufacturing, battery manufacturing and an auxiliary industry.

Indonesia has also attracted South Korean conglomerate Hyundai and US Tesla Motors to invest in battery and electric vehicle production.

Malaysia is the third country in Southeast Asia that has attracted investment in electric vehicle manufacturing from Chinese companies.

In January, the government of Malaysia's Melaka City announced that Malaysia's Fieldman and China's Changan Automobile will jointly invest RM1 billion to build an electric vehicle factory in Jasin district.

Also in January, parent company DRB-Hicom of Proton (Malaysian car manufacturer) signed a cooperation agreement with Smart Motors Company to enter the field of electric vehicles, selling small cars produced by this company in Malaysia and Thailand.

In Vietnam, the Government and National Assembly have issued preferential policies for electric vehicles. Specifically, from March 1, 2022, electric cars will be exempted from registration fees for three years, until the end of February 2025. The excise tax on battery electric vehicles with under nine seats will also be reduced to 3%, lasting for five years, until the end of February 2027.

VinFast has been investing heavily in electric car production. At the end of 2021, the company launched its first model, VF e34. In the near future, there will be a number of new models for the higher segment.

That's not to mention large Japanese automobile corporations that already have production bases in Southeast Asia, which can also quickly switch to producing electric vehicles.

Overcoming hindrances

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Southeast Asia has the opportunity to become a major center for global electric car production. The fact that ASEAN countries simultaneously pledged to cut carbon emissions and offer preferential policies for the development of electric cars, plus a large potential market and advantages in resources and labor costs, are important factors to lure attention of electric car manufacturers in the world.

However, some argue that the major limitation in the development of electric cars in Southeast Asia is the financial ability of consumers and incomplete infrastructure. The question is whether people with a relatively low income can afford an electric car? Do businesses and countries have enough financial resources to invest in building a charging system?

The price of electric vehicles is 30% higher than gasoline cars, while the number of electric charging stations is not growing fast enough to keep up with the increase in the number of electric vehicles on the road, along with the uneven distribution of charging stations across the country are the common concern of the electric vehicle industry. Customers will not buy electric vehicles without electric charging stations.

Even so, car companies still believe in the future of electric vehicles in Southeast Asia. For the issue of financial ability, SAIC Motor's plan is to sell competitively priced products. Accordingly, the price of MG ZS electric cars will be equivalent to that of gasoline cars of the same type of the US and Japan.

As for solving the problem of charging station infrastructure, businesses said they will aim for a solution to charge batteries at home.

According to research firm Juniper Research (USA), thanks to lower costs and convenience, electric vehicle charging at home in the next five years will increase. In 2021, globally, only 2 million households had a home charging case installed, but this number is growing rapidly, to 21 million by 2026.

Asia will lead the way, with an average household spending on electric vehicle charging at home of $678.

In Vietnam, some of the first customers using the VF e34 electric vehicle said that with a battery capacity of 42kWh, with normal charging mode, the car is fully charged after more than eight hours. The distance traveled after a single charge is from 200-220 km. The car can carry five people with more than 100kg of cargo behind in the city for about five hours.

If the new generation electric vehicles are equipped with a fixed charger at home or carried in the car, the problem of having public charging station infrastructure developed in time will be solved.

Tran Thuy

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