Electric vehicle (EV) manufacturers are preparing to invest more than $20 billion in South and Southeast Asia (SSEA) to build a strong EV industry in the region, according to a report by S&P Global Ratings.
The report highlights that although the project will be expensive and face specific risks associated with international investment, it could ultimately benefit EV manufacturers, especially those in China.
“According to our estimate, rated carmakers will spend more than $20 billion on making electric vehicles,” said Claire Yuan, S&P Global Ratings credit analyst. [EV] production in South and Southeast Asia for the next few years. “The expansion will likely enhance the business strength of some rated entities.”
Meanwhile, Japanese carmakers, traditionally strong in SSEA’s light vehicle market, may see a decline in market share due to increased EV adoption. However, Japanese companies are expected to maintain a strong position for the time being by relying on internal combustion engine (ICE) and hybrid vehicles, which remain popular due to limited EV charging infrastructure in the region.
Korean carmakers are in the midst of increasing production capacity in SSEA and adjusting between EV and hybrid models depending on demand. Investments spread over several years and shared with partners will help manufacturers manage costs.
Although this expansion requires considerable capital, S&P estimates that EV-focused capital expenditure in the region will amount to less than 15 percent of rated carmakers’ total capital expenditure in the coming years, allowing them to enter the SSEA market without excessive financial stress. Will help in growing.
