Challenges and Opportunities for the Automotive Industry in East Asia amidst Electrification

This report examines the ongoing transformation of the automotive industry towards electric vehicles (EVs) across both emerging and mature markets in East Asia. It highlights the strategic tension between incumbent Japanese original equipment manufacturers (OEMs), which continue to prioritise hybrid electric vehicles (HEVs) and favour a technology-neutral, incremental approach to decarbonisation, and newer entrants – most notably Chinese OEMs and Viet Nam’s Vin Fast – that are leveraging battery electric vehicles (BEVs) to disrupt a market long dominated by internal combustion engine vehicles (ICEVs). The report also analyses structural changes within Japan’s automotive sector, including the challenges faced by domestic EV start-ups and the ongoing adaptation of auto parts suppliers to vehicle electrification. In addition, it underscores intensifying inter-country competition for high-value segments of the EV value chain in the post-ICEV era, as ASEAN Member States reform industrial policies to reconfigure domestic value chains and the regional division of labour.