The Impact of the Top 3 Strategic Imperatives on the ASEAN Hybrid and Electric Vehicle Market

Transformative Mega Trends

Why: The electric vehicle (EV) trend is poised to gain traction in the ASEAN region owing to growing environmental awareness, technological advancements, policy support, and economic factors. Major automakers are shifting their focus toward EV development amid rising investment in establishing charging infrastructure globally. These factors influence consumer behavior, prompting policy changes and infrastructure investments in ASEAN.

Frost Perspective: Frost & Sullivan projects increased competition as foreign automakers expand their presence in the market. Chinese automakers, in particular, will grow rapidly in this region, challenging Japanese automakers' established position in the ASEAN market.Automakers are expected to launch new models in the non-premium vehicle segment by 2028 to cater to price-sensitive customers in the region.

Internal Challenges

Why: ASEAN lacks sufficient charging infrastructure for widespread hybrid electric vehicle (HEV) and EV adoption. Inadequate EV-friendly policies and regulations, low awareness about EV benefits, and concerns about performance hinder adoption further. The initial acquisition cost of EVs is higher than that of conventional internal combustion engine (ICE) vehicles, which is a major barrier to EV uptake.

Frost Perspective: Implementation of favorable regulations and subsidies will foster a flourishing EV ecosystem. Thailand is expected to retain its lead in establishing the EV ecosystem over the forecast period, with Indonesia, Vietnam, and Malaysia following suit.OEMs introducing more affordable EV models and aggressive marketing initiatives will foster a growing inclination toward EV adoption in the region.

Competitive Intensity

Why: ASEAN’s fragmented market structure intensifies competition as EV automakers secure their market position. The region’s market size is smaller than China and Europe, heightening competition among companies vying for market share.

Frost Perspective: The rapid expansion of Chinese car manufacturers offering affordable, high-quality EV models in this region will likely challenge the dominance of Japanese automakers.Automakers will continue investing in hybrid and electric powertrain technologies while seeking to capitalize on external partnerships to enhance their capabilities in this area.

Scope of Analysis

Segmentation

Powertrain

Fuel Type

• Traditional ICE
• Main fuel solutions include gasoline and diesel
• Continuous development of fuel efficiency and lower emission
• Examples: Toyota Vios, Toyota Hilux, Honda City

Hybrid

• HEV
• Combines traditional ICE, fuel tank, battery pack, and electric motor; hybrid technology applies more than one form of energy
• Examples: Toyota Corolla Cross Hybrid, Honda Jazz Hybrid

Electric

• PHEV, BEV, FCEV
• Electric powertrain technology relies on electric motors with rechargeable battery packs (FCEV is rare in ASEAN)
• Examples: BYD Atto 3, BMW i8Nissan Leaf, Renault Zoe, Mitsubishi Outlander PHEV

Growth Drivers

HEV and EV: Growth Drivers, ASEAN, 2023–2030

• ASEAN governments actively encourage EV uptake by implementing various incentives, including tax benefits and subsidies, to curb carbon emissions and decrease their reliance on fossil fuels.
• Robust charging infrastructure development is a crucial contributor to EV market growth in the region. As the number of charging stations increases and becomes easily accessible, it will be more convenient for consumers to own and use EVs.
• EVs are increasingly cost-effective in the long run due to their lower fuel and maintenance costs. Additionally, the increased availability of EV options in the premium and non-premium segments will make them more accessible to a broader range of consumers.
• Battery technology advancements are leading to significant improvements in EV range and efficiency. This is driving market growth as more people recognize the benefits of EVs.
• Consumers are increasingly aware of the adverse environmental impacts of traditional ICE vehicles and more sustainable, eco-friendly alternatives. EVs contribute to a pollution-free environment by reducing harmful emissions and helping to create a cleaner, healthier world.

Growth Restraints

• Despite EVs offering lower running costs in the long term, their initial purchase price is higher than conventional ICE vehicles. This can be a significant challenge for potential buyers in ASEAN, whose income levels are lower compared to developed markets. The higher upfront costs may lead consumers to opt for ICE vehicles instead of EVs despite their long-term benefits.

• Lack of charging infrastructure in the ASEAN region could restrict the range and convenience of EVs, deterring prospective buyers.

• EV battery exposure to hot weather could impact its lifespan and performance, reducing driving range. This is a critical hurdle affecting EV adoption in the region.
• Many ASEAN countries rely on imported technology for EVs, which could push up expenditure, restricting growth. Developing domestic industries and technologies in this field can also be challenging and time-consuming.
• Despite many governments supporting vehicle electrification trends, inconsistent regulations and policies across different ASEAN countries can hinder EV growth and adoption.

Key Competitors

• Wuling
• Toyota
• Hyundai
• Mitsubishi
• BMW
• Great Wall
• MG
• Volvo
• VinFast
• Audi
• Mercedes-Benz
• Porsche
• Honda