ASEAN is poised to become one of the world’s fastest-growing electric vehicle (EV) markets and an increasingly important global manufacturing hub over the next decade, supported by rising consumer demand, expanding industrial capabilities and growing investments from Chinese automakers, according to a new industry report.
The report said the region’s passenger EV sales are projected to more than double from 419,547 units in 2025 to almost 690,000 units by 2030 before reaching 916,997 units by 2035, lifting EV penetration to 22.7% of total passenger vehicle sales.
While Vietnam and Thailand will remain ASEAN’s largest EV markets, the report expects growth to become increasingly diversified as Malaysia and Indonesia emerge as key contributors.
Vietnam and Thailand are forecast to account for more than 72% of ASEAN passenger EV sales in 2026, but their combined market share is expected to decline to 64% by 2035 as demand accelerates in neighbouring markets.
The report identified Malaysia as one of the region’s strongest near-term growth markets, supported by relatively high household incomes and increasing affordability of EVs.
Around 86% of Malaysian households earned more than US$10,000 in disposable income in 2025, with that figure projected to rise to 90% by 2030.
Although tax exemptions for completely built-up (CBU) imported EVs expired at the end of 2025, the report said the impact on consumers is likely to be moderated by the strong presence of competitively priced Chinese-made EVs and Tesla vehicles, alongside intensifying competition among Chinese brands.
Indonesia, meanwhile, is expected to provide a significant longer-term growth opportunity.
With a population approaching 280 million and ASEAN’s largest middle-income consumer base, the country is forecast to benefit from rising household incomes and increasing vehicle ownership.
More than 42% of Indonesian households earned disposable incomes exceeding US$10,000 in 2025, with the proportion expected to reach about 50% by 2030.
The report also highlighted Vietnam and the Philippines as markets with substantial long-term potential due to relatively low vehicle ownership rates and expanding driving-age populations.
Vietnam, in particular, is witnessing a gradual transition from motorcycles to passenger vehicles, creating favourable conditions for EV adoption.
Passenger EV sales in Vietnam are forecast to increase from approximately 175,000 units in 2025 to more than 366,000 units by 2035.
Beyond demand growth, the report said ASEAN is rapidly strengthening its position within the global EV supply chain.
Initially, governments across the region focused on stimulating demand through tax incentives, import duty exemptions and registration fee reductions.
Policies such as Thailand’s EV3.0 and EV3.5 programmes, Indonesia’s import incentives and Malaysia’s tax exemptions helped lower vehicle prices and accelerate EV adoption.
However, the report noted that governments are increasingly shifting their focus towards localisation by linking incentives to domestic manufacturing commitments.
Indonesia now requires manufacturers benefiting from duty-free EV imports to match imported vehicle volumes with local production by 2027, while Thailand has tied incentive schemes to production localisation targets.
Malaysia has similarly encouraged local assembly by allowing incentives for completely knocked down (CKD) vehicles to continue through 2027 while allowing CBU incentives to expire.
The policy shift has coincided with a surge in investment by Chinese automakers seeking overseas growth amid intense price competition and slowing demand in China.
Chinese passenger vehicle exports to ASEAN have grown rapidly over the past five years, with Malaysia and Indonesia among the largest beneficiaries.
The report said ASEAN’s long-term competitive advantage extends well beyond vehicle assembly.
Indonesia and the Philippines accounted for more than 68% of global nickel mine production in 2024, providing critical raw materials for EV batteries.
Vietnam holds around one-fifth of the world’s rare earth reserves, while Malaysia, Thailand and Myanmar are established producers of rare earth elements used in electric motors and advanced automotive electronics.
Malaysia is also strengthening its role in semiconductor manufacturing through the New Industrial Master Plan (NIMP) 2030, with major investments in silicon carbide power semiconductors that are increasingly essential for EV production.
Among the key investments highlighted is Infineon’s RM30.1 billion silicon carbide fabrication facility in Kulim, which is expected to become the world’s largest of its kind.
Indonesia has leveraged its nickel resources to attract large-scale battery manufacturing investments, including CATL’s US$6 billion battery ecosystem project and the Hyundai-LG Energy Solution battery cell plant.
Thailand continues to expand battery pack production and automotive electronics manufacturing alongside vehicle assembly.
The report said ASEAN’s established automotive manufacturing base further strengthens its industrial outlook.
By 2030, Indonesia is expected to produce approximately 1.15 million passenger vehicles annually, followed by Malaysia with around 799,000 units and Thailand with approximately 674,000 passenger vehicles alongside more than one million light commercial vehicles.
Vietnam is also emerging as a significant production hub, supported by VinFast’s expanding manufacturing capacity and growing domestic EV sales.
Despite the positive outlook, the report cautioned that the region faces risks if localisation policies outpace the development of supporting supply chains.
Many newly established EV assembly facilities continue to operate below optimal capacity, raising concerns that premature localisation requirements could increase production costs and slow improvements in vehicle affordability.
Nevertheless, the report pointed to Thailand as evidence that successful localisation can coexist with competitive pricing, citing locally assembled Chinese EV models that have become more affordable despite the shift from imports to domestic production.
Overall, the report concludes that ASEAN is transitioning from being primarily an emerging EV consumer market into a strategically important manufacturing and supply chain hub, positioning the region to capture greater value across battery materials, semiconductor production, component manufacturing and vehicle assembly over the coming decade.
