As electric vehicle (EV) adoption accelerates across South East Asia, ASEAN is evolving from an emerging demand center into an increasingly important manufacturing and supply-chain hub, BMI Country Risk and Industry Research said Thursday.
The research house said in a note that strong demographics, rising incomes and supportive government policies are driving rapid growth in vehicle electrification, while the expansion of Chinese automakers and the localization strategies adopted by regional governments are reshaping the competitive landscape.
“As EV sales growth moderates across many mature markets, ASEAN is becoming one of the world’s most important sources of future demand growth,
“We forecast passenger EV sales to rise from 419,547 units in 2025 to almost 690,000 units by 2030 and 916,997 units by 2035, increasing EV penetration to 22.7 percent of passenger vehicle sales by the end of the forecast period,” it said.
According to BMI, Vietnam and Thailand will remain the region’s largest EV markets, forecast to jointly account for more than 72 percent of ASEAN passenger EV sales in 2026, supported by strong policy backing and expanding vehicle availability.
However, growth will become increasingly diversified. By 2035, Vietnam and Thailand will see the combined share of ASEAN passenger EV sales decline to 64 percent, as Malaysia and Indonesia capture a larger share of demand, said the research house.
BMI noted that Malaysia is particularly well positioned to lead this growth outside the two dominant markets, supported by one of ASEAN’s most affluent consumer bases, with 86 percent of households earning more than $10,000 in disposable income in 2025 and this figure forecast to rise to 90 percent by 2030.
While the expiry of tax exemptions for fully imported EVs may create some near-term pricing pressure, it sees the impact is likely to be moderated by the dominance of China-produced EVs and China-made Teslas, which remain highly price competitive within the Malaysian market.
“Combined with intense competition among Chinese brands and improving EV affordability, this should support EVs capturing an increasing share of new vehicle purchases over the medium term,” BMI noted.
BMI also sees Indonesia offers a complementary longer-term opportunity.
According to the research house, EV adoption is developing from a lower base, but the market combines ASEAN’s strongest driving-age population profile with the region’s largest middle class in absolute terms, supported by a population of almost 280 million.
More than 42 percent of households earned disposable incomes above $10,000 in 2025, rising to around 50 percent by 2030, expanding the pool of consumers able to participate in vehicle ownership.
“Together, Malaysia’s stronger near-term affordability profile and Indonesia’s larger long-term consumer base should support a broader and more diversified ASEAN EV demand story over the coming decade,” said BMI.
The region’s longer-term growth will also be supported by motorization.
According to BMI, Vietnam and the Philippines rank among ASEAN’s lowest markets for vehicle ownership per 1,000 people while also benefiting from large driving-age populations.
Vietnam illustrates the scale of the opportunity. Motorcycle sales declined from 3.4 million units in 2015 to 3 million units in 2022, while passenger vehicle (PV) sales increased from 189,012 units to a peak of 294,770 units over the same period.
The trend has continued, with motorcycle sales falling further to approximately 2.6 million units in 2025, suggesting a growing share of households are transitioning from two-wheelers to passenger vehicles (PVs).
As vehicle ownership expands, BMI said EVs are increasingly positioned to capture a larger share of first-time vehicle purchases.
“Therefore, we forecast passenger EV sales in Vietnam to rise from approximately 175,000 units in 2025 to 287,379 units by 2030 before reaching 366,204 units in 2035,” it said.
Government support has also been central to ASEAN’s EV expansion, according to BMI.
It is noted that during the first phase of the transition, policymakers focused on stimulating demand through import-duty exemptions, registration-fee reductions and tax incentives.
Thailand’s EV3.0 and EV3.5 programs, Indonesia’s duty-free EV import schemes and Malaysia’s exemptions for imported EVs all helped reduce purchase costs and expand consumer choice.
These policies proved highly effective, with EV import-duty exemptions accounting for almost half of the roughly $6 billion spent supporting EV adoption across South East Asia in 2025, said BMI.
BMI also highlighted that Chinese automakers became the primary beneficiaries as ASEAN’s combination of strong policy support and rising demand created one of the world’s fastest-growing export destinations for Chinese EV manufacturers.
This coincided with intensifying competition in China, where rapid capacity expansion, aggressive price competition and slowing domestic demand growth have compressed margins and increased the need for overseas growth.
As a result, ASEAN emerged as an attractive expansion destination for Chinese automakers seeking new sources of volume growth.
It is noted that Indonesia’s imports of Chinese PVs increased from less than $1 million in 2020 to more than $2 billion in 2025, while Malaysia’s imports rose from approximately $250 million to more than $1.6 billion over the same period.
Similar trends have been recorded across Thailand, Singapore and Cambodia.
BMI noted the resulting surge in imports has pushed policymakers towards localization.
It is noted that Indonesia now requires manufacturers benefiting from duty-free EV imports to match imported volumes with domestic production by 2027.
Thailand’s EV3.0 and EV3.5 programs similarly link incentives to local production compensation requirements.
Malaysia has taken a more market-oriented approach, but the expiry of completely built units (CBU) import incentives at end-2025, combined with continued completely knocked down (CKD) import incentives until end-2027, is encouraging manufacturers to shift towards local assembly.
“ASEAN’s EV policy framework is therefore increasingly evolving from demand creation towards industrial development and local value creation,” said BMI.
BMI also sees industry opportunities in ASEAN markets extend well beyond vehicle sales.
In terms of upstream, it noted ASEAN is already a critical supplier of battery and EV materials.
Indonesia and the Philippines accounted for more than 68 percent of global nickel mine production in 2024, while Indonesia has become the world’s second-largest refined nickel producer, it said.
In the midstream segment, it sees ASEAN combines resource availability with established electronics and battery-manufacturing capabilities.
Malaysia’s New Industrial Master Plan (NIMP) 2030 prioritizes EV-related semiconductor development, while Vietnam’s Semiconductor Industry Development Strategy seeks to expand advanced electronics manufacturing.
As for downstream, it said ASEAN already possesses substantial automotive manufacturing capability.
Indonesia is forecast to produce approximately 1.15mn PVs by 2030, Malaysia around 799,000 units and Thailand roughly 674,000 PVs alongside 1.14mn light commercial vehicles.
Malaysia accelerates EV push with focus on affordability, infrastructure and local ecosystem