The production hub shift: From conventional car to EV manufacturing in Asia

As Asia’s automotive industry transitions, the shift will transform the production hub arena and determine how transportation will change in the future. Said move was steered by the fact that the transportation industry accounts for 17 percent of global greenhouse gas emissions.

Asia’s automotive industry in select countries has been gradually shifting focus to EV manufacturing. It paved the way to establishing a stringent number of EV production hubs across Asia as vehicle parts manufacturers and comprehensive ecosystems lean toward electric technology.

“According to Counterpoint’s Global Passenger Vehicle Forecast, the SEA market of electric vehicle ecosystem is expected to grow at a fast pace, and by the end of this decade, EV sales are expected to cross the 3.5 Million mark at a CAGR of 124%,”

said Senior Analyst Soumen Mandal.

Mature markets like China, Thailand, and Japan are leading the EV adoption curve in the auto industry supply chain. However, emerging economies are still lagging. Nonetheless,  certain Asian countries are underway in progressing the EV industry.

Southeast Asian countries promote EV growth through financial incentives, energy security-related efforts, infrastructure development projects, and industry partnerships. For example, Thailand identified the “Next Generation Automotive” as one of its 10 S-Curve Industries and reduced taxes and duties on imported EVs.

Singapore, on the other hand, is distributing rebates to lower the upfront cost of EV purchasing and increase EV registrations. Then, Malaysia is exempting EV owners from road tax. While in the Philippines, EV manufacturers are exempt from income taxes for four to seven years.

Meanwhile, Cambodia aims to have a significant number of cars and motorbikes be EVs by 2050. Whilst Indonesian President Joko Widodo has called for the development of an industrial ecosystem for lithium batteries.

On the side, Indonesia opened its first EV battery production line facility in June 2022. The country is aiming to export 200,000 EVs by 2025. Tesla also signed a deal with the Indonesian government to build a battery and EV plant in Central Java.

Such is in regard to the fact that Southeast Asia has nickel sources and other key minerals. It makes the region particularly well-positioned for battery production. Said region has also seen growing investment from international companies such as CATL from China and Foxconn from Taiwan. 

Growth through partnerships

Strong partnerships with EV suppliers become more critical as the industry shifts toward EVs.  Consumers are also increasingly comparing electric cars vs. gas and electric cars vs. hybrid options. This is in regards to the long-term costs and benefits of ownership. 

Both China and Europe are calling for an earlier shift to EVs. In turn, auto companies will have no choice but to take note of and increase their timelines even more.

China’s electric vehicle ecosystem has seen massive growth in recent years, closely linked to Tesla, which has become the leading EV company. As automakers race to expand their EV offerings, building a robust EV supply chain has become more important.

Based on data from Forbes, Japanese brand Nissan announced its plans to invest $1.3 billion into a comprehensive EV production hub in the United Kingdom. The initiative is slated for completion by 2023’s end.

Said remarkable investment marks a significant step in Nissan’s long-term goal to transition toward full electrification. Meanwhile, this follows Hyundai-Kia’s record-setting $7.4 billion move to invest in EVs and hydrogen cars for the US market by 2025.

Honda intends to make its statement within 2024, following their agreement with General Motors. Two new EVs are set to be released on their behalf.

Manufacturers, governments, and companies must collaborate to ensure that plans for EV growth push through seamlessly. They need to focus on the production hub segment and investment in charging infrastructure to meet the growing EV demand. Doing so could help tackle issues that may arise in Asia’s electric vehicle ecosystem.

Moreover, partnerships have the potential to enable the development of uniform technical standards. Such will aid in speeding up advancements within the EV markets worldwide.

Rapid electric vehicle growth has emerged as a promising solution for sustainable land transportation. According to International Energy Agency (IEA), China, Europe, and the United States comprise approximately two-thirds of the global car market share. However, they exceed 90% of electric car sales combined.

Top-tier Asian EV manufacturers on roll-out

According to Consumer Reports, major automakers are shifting to EVs, investing billions of dollars in battery production, and committing to ambitious EV targets. 

Such initiatives include building and expanding production hub functions for EVs. For example, Honda has invested $3.5 billion in a new battery plant in Ohio, while BMW plans to introduce 12 EVs by 2025.

As the demand for EVs grows, manufacturers are not only focusing on producing more but also looking for ways to secure the necessary components.

Ford intends to produce two million EVs annually by 2026, with half of all global sales being EVs by 2030, requiring a robust EV supply chain.

Genesis, the luxury vehicle division of South Korea’s Hyundai Motor Group, has made a significant statement about its commitment to EVs. Their first EV model is the GV60.

Hyundai is committing all new models from 2025 to be purely electric. Kia, Mazda, and Mercedes-Benz are also increasing their EV lineups and working with EV parts suppliers to secure the necessary components.

As the Asia-Pacific region sold close to 2.96 million EVs in 2021, several major automakers have stepped up their efforts in transitioning the production and sale of EVs. Such includes partnering with EV parts suppliers to source critical EV components, such as batteries and motors. 

Here is a roundup of the five leading  EV manufacturers currently operating within the Asian market:

1. BYD Auto

Chinese EV manufacturer BYD Auto is making a global impact, with 229,506 units sold in 2019. It also had 1.62 million sales between January and November 2022, outpacing Tesla’s 1.37 million for that year.

BYD Auto has been partnering with leading electric car suppliers for critical components. They plan to expand production lines with semi-trucks and buses powered by batteries.

2. SAIC-GM

SAIC-General Motors (GM) Wuling introduced its budget-friendly Wuling Hong Guang MINI model that requires minimal electric car maintenance. It features two electric motor options—one producing 3 kW (4 hp) and another 10 kW (13 hp). 

The car was trendy amongst consumers worldwide. It has been sold over 400,000 units throughout 2021, making it a top global seller among budget-friendly EVs.

3. Nio Motors

Since 2020, NIO has seen rapid growth in its electric car deals sales, leading to 91,429 vehicles in 2021, which is a 109% increase from the previous year. NIO is a Chinese manufacturer that has been finding success with their custom-built luxury electric cars since 2018.

Additionally, NIO plans to optimize its logistics operations to streamline mass production and reduce costs. They aim to introduce new models with thrilling performance capabilities, such as the EP9 supercar, in the future. 

4. Nissan

Japanese automaker Nissan is one of the early adopters of the concept of EVs. They released the Nissan LEAF in 2010. This highly advanced zero-emission vehicle has reshaped how people see EVs, with over 500,000 units sold across various countries as of 2020.

5. Zhidou

This Chinese company took a different approach to make electric cars for city commutes. It developed two efficient models – Wise Bean and D1+, showcasing its commitment to the electric vehicle ecosystem. 

Their primary focus was creating an eco-friendly car that consumers could use instead of having one depend only on public transport or taxis. They won the ‘Green Car Of The Year award in 2013. It was due to their commitment to clean transportation solutions and setting them apart from traditional gasoline cars.

Automakers must juggle different timetables for swapping from regular gasoline cars to EVs and eventually going full electric. The Chinese market is leading the way with boasting figures of 16% compared to just 4.5% in the US, while Europe has hit 14% in EV sales.

The advent of EVs and their production hubs

As economic and environmental concerns take center stage in the global transportation sector, EVs are making significant strides toward becoming a viable alternative to fuel-powered cars.

Asian production hubs are on the verge of transitioning from conventional car manufacturing to EV production. EV  Production Hubs that sprout up across Southeast Asian countries such as Singapore, Malaysia, and Indonesia.

Thanks to government regulations and increased demand for eco-friendly solutions, major automotive and electric vehicle parts manufacturers are investing in EVs, resulting in nearly 2.96 million sold as of 2021.

The shift marks a transformation of the Asian auto industry’s production hub segment into an increasingly greener future that rethinks how we look at transport solutions worldwide. Such provides us with cleaner air and more sustainable mobility options than ever before.