Global electric car sales reached 14m in 2023, +34% YoY, making up 19% of total car sales. BloombergNEF forecasts growth to slow in 2024F to 22% YoY due to saturation in China and Europe, and uncertainty in the US ahead of the Nov presidential election and policy continuity.
Weak 1Q24 sales of leading EV companies confirms this concern. However, the ASEAN – 6 markets reported a 4x surge in electric car sales to 141,095 in 2023, 6% of ASEAN – 6 car sales.
MIBG Sustainability Research said it believes ASEAN EV adoption will continue to increase due to favourable regulations (TH and ID), local brands (VN) and China’s EV makers launching new models at low price points.
MIBG reiterated their view that ASEAN automakers, especially those with Chinese partners, could benefit from the EV rush, backed by battery minerals/ecosystem (ID and PH), a large automotive production base (TH, ID and MY) and demand(ID, MY, TH, and VN).
China EV makers cutting prices; have operating leverage
Backed by cost and technology strength, China’s EV makers became the world’s largest exporters in 2023 and pose a market-share threat to other global automakers from the US, Japan and S Korea. China’s EV makers are operating at c.50% utilization and have cut prices by introducing EVs at sub-USD25k in Europe and Asia.
As China and Europe becomes saturated in terms of EV penetration it is likely that the Chinese EV makers will increase their presence in ASEAN through cheap imports and by setting up greenfield units to take market share when car buyers in MY, ID, TH and VN switch to electric cars from internal combustion engine cars.
ASEAN – 6 markets fully electric car share is c.6%
ASEAN – 6 markets reported a 4x jump in fully electric (FE) car sales to 141,095. TH and VN were the top two countries forming 77% of the sales.
TH reported a 7x jump in sales to 76,314 cars. For VN, we have considered Vinfast data, which sold about 31,700 cars in 2023. 75-80% of Vinfast’s sales was to its car-hailing company. ID had FE car sales of 17,062, +65% YoY in 2023 and MY saw 10,159 sold, +286% YoY. PH was the smallest at 367 FE cars sold.
Of total car sales, TH led with FE car sales at 18.8%/total, followed by SG at 18.1%, VN at 12.9%, ID at 2.2% and MY at 1.4%. Overall, FE share of car sales was 6.2% for the ASEAN – 6 markets in 2023 vs 1.6% in 2022.
As more low-priced EV models are launched in 2024 and 2025, MIBG expects ASEAN’s EV adoption rate to increase further. Another driver would be direct subsidies to buyers and addition of charging points.
Regulatory push and cheaper EVs – key to EV adoption
MIBG reiterated their thesis that regulatory push is key to faster adoption of EVs. This is clearly visible in the EV adoption in TH. TH is offering cash subsidy to EV buyers as well as lower excise and import duty for OEMs. The Thai government is also incentivising local manufacturing. ID is offering duty cuts and pushing domestic manufacturing.
The other way to push EV sales would be to increase prices of gasoline by reducing subsidies, which can be adopted by MY. Finally, cheaper EVs (sub USD15,000), a game mastered by Chinese OEMs, will make it difficult for Japanese/Korean OEMs to compete in ASEAN markets.
Within MIBG’s coverage universe, they believe companies across automotive, materials, industrials technology and transport could see potential benefits from EV adoption.
Electrified transport is #1 industry for global energy transition investments
As per BloombergNEF, global energy transition investments increased to USD1.8t in 2023, up 17% YoY. Electrified transport (36%), renewable energy (35%) and electricity grids (18%) account for 89% of the energy transition investments. 2023 is the first year where investments in electrified transport at USD634b (+36% YoY) surpassed investments in renewable energy of USD623b.
Electrified transport share of global energy transition investments has increased from 6% in 2014 to 36% in 2023, whereas that for renewable energy declined to 35% from 85% in 2014.
