Over 2024-2025, Chinese electric vehicle (EV) battery manufacturers have launched a wave of expansion into Southeast Asia (SEA). Leading the charge is Contemporary Amperex Technology Co Ltd (CATL), the world’s largest battery maker. It broke ground in 2025 on a USD6 billion battery plant in Karawang, Indonesia. The major players EVE Energy and Gotion High-Tech have announced investment in Malaysia, Thailand and Vietnam.
This regional push is driven by multiple factors: proximity to China and the need to diversify supply chains amid global trade uncertainties. SEA offers abundant resources and growing regulatory support. However, challenges remain, including infrastructure gaps, regulatory complexity and competitive pressures from South Korean and Japanese firms.
Strategic drivers behind Chinese battery makers’ expansion
Although Chinese companies dominate the global battery market, their production capacity is still largely based in China. In 2024, China accounted for 61% of global battery market value.
SEA’s potential remains largely untapped, with the region accounting for only 2.4% of global production, despite its rich mining resources and geographic proximity to China
Source: Euromonitor International
As Chinese EV brands like BYD and Xiaopeng expand into SEA, battery makers are following suit to reduce logistics costs and align with local vehicle assembly operations. This regionalisation also helps Chinese battery makers avoid tariff barriers in Western markets by relocating production to Southeast Asia. Additionally, intensifying competition and shrinking profit margins in China are prompting manufacturers to seek new growth opportunities abroad, making SEA an attractive destination.
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SEA’s rising role in the global EV supply chain
SEA is rapidly positioning itself as a vital player in the global EV ecosystem. The region offers a compelling mix of resource availability, manufacturing potential and policy support. Indonesia stands out with its abundant reserves of nickel and cobalt, which are critical materials for EV batteries. In 2024, Indonesia accounted for 57% of global nickel production and 11% of cobalt output. Producing locally with these resources not only lowers production costs but also enables vertical integration, from mining to battery cell manufacturing.
Other SEA countries are also emerging as key players. Thailand is an EV production centre, integrating closely with battery plants from SVOLT and BYD. Malaysia is also developing capabilities in battery manufacturing, attracting investment from EVE Energy and Gotion High-Tech.
Compared to China, SEA offers distinct advantages. ASEAN intra-regional trade agreements and more favourable trade policies with the EU and the US facilitate smoother cross-border operations. These factors make SEA an increasingly attractive destination for Chinese battery makers seeking cost efficiency and market access.
Challenges facing Chinese battery makers in SEA
As well as advantages, SEA has several limitations and risks for Chinese battery manufacturers. One major challenge is limited vertical integration compared with China. While Indonesia is making strides, most countries in SEA still rely heavily on imports for key battery components like lithium. Infrastructure gaps, especially in EV charging networks, and fragmented regulatory environments further complicate operations.
Furthermore, sources indicate that Chinese battery makers have already achieved over 95% automation, threatening local battery markets with semi-automation. Thus, there has been regulatory and public demand in SEA for Chinese firms to create more local jobs, with Chinese makers having to balance production costs and local support.
Chinese firms must also navigate regulatory and compliance risks. Trade protectionism is rising, with local governments tightening import and assembly controls to protect domestic industries. Environmental regulations are also becoming stricter, particularly around mining and manufacturing, requiring sustainable technology innovation.
Operational challenges include potential technology transfer requirements and difficulties in scaling production while maintaining quality. Competitive pressures are also intensifying, with Korean and Japanese firms increasing their regional investment. Chinese firms need to promote unique strengths: vertically integrated supply chains and advanced control in cost and quality.
Opportunities: SEA’s diverse and growing battery demand
Beyond passenger EVs, Southeast Asia is also witnessing rapid growth in electric motorcycles, commercial vehicles, including buses and trucks, and drones. This diversification of demand underscores the strategic importance of SEA in the global EV transition, supporting the expansion of Chinese manufacturers.
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