Automotives and EV industry in Asia

Source: HSBC image library

Asia leads the world in electric vehicle (EV) sales: more than 60% of new EVs sold over the next five years will be in Asia.¹ Moreover, transport is the second-largest contributor to global emissions and is thus a key focus for decarbonisation.²

China has been setting the pace, with EVs forecast to make up around 45% of new vehicle sales this year.³ EV makers are also increasingly focused on South and Southeast Asia, where a growing middle class is coming of age as government regulation, fiscal policy, and ambitions to move up the manufacturing value chain are converging to create a sweet spot for the EV market.

A recent EY report estimates the average compound annual growth rate of the EV market in the six biggest ASEAN economies at 16-39% between 2021 and 2035, with annual sales reaching USD100 billion by 2035.⁴

This rapid growth is an opportunity for developing markets to leapfrog legacy technology. The global fleet of passenger cars and light commercial vehicles is set to more than double to 2.5 billion by 2050, with most of the growth coming from developing markets.⁵ “As incomes rise across Asia Pacific over the coming decades, car ownership is set to increase, with Asia forecasted to account for over 60% of the 115m EVs sold worldwide over the next 5 years.⁶ The falling cost of production of electric vehicles⁷ gives the region an opportunity to electrify its fleet, reducing carbon emissions and improving air quality in congested cities.⁸ The increased sale and production of electric vehicles may present many opportunities across the value chain, including battery manufacturing, the roll-out of charging infrastructure, and financing solutions for consumers.⁹^,¹⁰”

Brian Peers, Global Head of Sustainable Transport & Fuels, HSBC

Source: HSBC image library

Opportunities for Asia in the EV ecosystem:

Manufacturing: As automakers build local supply chains and regional manufacturing nodes, early movers stand to gain from providing intermediate goods and services, such as components and manufacturing machinery. Demand for power supply equipment, for example, is a particular growth area.¹¹
Technology: Consumer demand for specialisation and customisation to local tastes creates opportunities for technology and software providers. Southeast Asia’s tech savvy population already has multiple use cases and success stories for consumer-facing software applications, such as US-listed ride-sharing platform Grab and Indonesia’s GoTo Gojek Tokopedia, which is investing in an electric scooter factory to build an all-electric fleet by 2030.¹²
Finance: The EV transition will require massive investment in charging and infrastructure, raw materials processing and power grids, alongside manufacturing capacity, logistics, and workforce training. Manufacturers who are able to make the switch to EVs may be able to benefit from access to sustainable financing – as China’s Geely Auto, one of China’s largest vehicle manufacturers, demonstrated when it established a sustainable financing framework in 2021.¹³ This framework sets out how Geely Auto can get financing in different types of transactions, including use of proceeds rules which align with the United Nations Sustainable Development Goals.¹⁴ From this, the company was issued a USD400 million sustainable club loan (i.e., a loan provided by HSBC and other banks) which will be used to support research and development of vehicles in the new energy segment.¹⁵
Infrastructure: Charging infrastructure and electricity grids must also be upgraded to cope with increased demand for electricity and the growing use of renewable generation. Several global automakers have committed to use only renewable energy by 2050,¹⁶ bolstering demand for clean power to support EV manufacturing and supporting the investment case for grid decarbonisation. In countries with advanced solar and wind capacity, EV infrastructure is an early-stage opportunity: in Vietnam, for example, over USD12 billion is needed for charge-points alone.¹⁷

HSBC is working to help automotive businesses transition to zero-emissions vehicles and unlock new opportunities across the electric vehicle value chain.¹⁸For example, we have been involved in helping PT Blue Bird Tbk and Subsidiaries (“Bluebird”), a leading taxi fleet in Indonesia, with an IDR350 billion Term Loan, including an IDR50 billion Green Term Loan which was dedicated to acquiring EVs. Bluebird is aiming to reduce its CO2 emissions by 50% in 2030 and having 10% of its taxi fleet made up of EVs by 2030.¹⁹ And to facilitate EV adoption, we are also looking to support the build out of new charging infrastructure and exploring new EV financing solutions for business and retail customers.²⁰

With our roots in Asia for over 150 years, we look forward to continuing to support our clients and moving towards a more sustainable economy.

Today, we finance a number of industries that significantly contribute to greenhouse gas emissions. We have a strategy to help our customers reduce their emissions and to reduce our own. Find out more.

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