Electric vehicles in Southeast Asia are underestimated.

First, look at a figure — 560 million US dollars.

In the six months following the disruption of the Strait of Hormuz, the volume of crude oil imports replaced by electric vehicles in Southeast Asia is roughly at this level.

Put into the broader context of global oil trade, this amount is not even a tiny fraction of the total.

Yet it is precisely this seemingly insignificant sum that has brought a far bigger issue to the table: the energy security calculation for Southeast Asia has undergone tremendous changes.

For decades, economies that import oil have focused on three core metrics when calculating security: where the oil comes from, whether the transport routes are unobstructed, and whether stockpiles are sufficient.

The common point of these three metrics is that the initiative is not fully in their own hands.

The shipping lanes lie at the doorstep of other countries, oil prices are subject to fluctuations in the global market, and reserves can only last for a limited period.

Now, electric vehicles have rewritten this formula.

Every additional electric vehicle on the road reduces dependence on oil tankers, and increases the capacity to convert local electricity into travel mileage. The unit of measurement for energy security has gradually shifted to "how much electricity can be stably delivered to the wheels".

The 560 million US dollars saved in six months in Southeast Asia is only an early signal that this stock of resources is starting to generate returns.

Behind this signal lie deeper changes. We will find that Southeast Asia is currently following an electrification path different from that of China.

Saving 560 million US dollars,

what is the more valuable part?

What is the nature of this 560 million US dollars? Ember's statistics measure the crude oil demand replaced by pure electric vehicles, and only account for passenger cars. It is reported that the number of motorcycles, two-wheelers and three-wheelers in Southeast Asia far exceeds that of passenger cars, and these means of transport save an even larger share of fuel. This means that 560 million US dollars is a relatively conservative lower limit, and the actual scale of substitution is larger than this figure.

Why emphasize this point? Because when many people see such numbers, their first reaction is "money saved".

Indeed, the higher the oil price, the easier it is to calculate the economic benefits brought by electric vehicle substitution.

Brent crude oil has exceeded 100 US dollars per barrel more than 60 times this year, and amid repeated fluctuations, the cost of imported oil is unstable.

However, imported oil is a variable cost that keeps flowing out: you pay more when oil prices rise, and you may not be able to buy oil even if you pay when shipping routes are disrupted. Electric vehicles, charging piles, and distribution networks are fixed assets invested in advance.

The nature of these two types of expenditure is completely different.

The former faces price fluctuations in the global market and geopolitical risks, while the latter brings locally controllable energy conversion capabilities.

Oil imports are recorded in daily operating accounts, and any slight disturbance will directly affect cash flow; once electrification infrastructure is built, it becomes a long-term asset that is usually unnoticeable, but its value surges when disruptions occur.

This is the substantive change in the logic of energy security.

When oil tankers cannot arrive, whether your vehicles can still run depends on whether there is sufficient local electricity, enough charging piles, and whether the power grid can support the demand.

Therefore, a more accurate interpretation of the 560 million US dollars is an early bill for a "disruption insurance" that has started to generate returns, rather than a simple saving on oil expenses.

So how is this logic implemented at the policy level? Thailand is considering a 24 billion Thai baht plan, equivalent to about 714 million US dollars, which aims to help car owners replace up to 80,000 old commercial vehicles with electric models, including taxis, buses, trucks and tuk-tuks.

This direction is very carefully chosen.

Commercial vehicles have high utilization rates, travel long distances, and consume large amounts of fuel. Per unit of capital invested, the efficiency of replacing oil is much higher than that of private passenger cars. With the same amount of money, replacing a taxi that runs on the road every day saves far more fuel than replacing a private car that is only driven on weekends.

The same logic applies to two-wheelers and three-wheelers.

Southeast Asia has the world's largest fleet of two-wheelers and three-wheelers. The International Energy Agency estimates that by 2035, the electrification rate of this group will be close to 60%. These vehicles have low unit prices, low charging demand, and are easy to deploy under battery swapping models, so the marginal efficiency of replacing oil is very high. Ember itself also mentioned that excluding two-wheelers and three-wheelers will underestimate the fuel-saving scale in Southeast Asia, which is the reason.

Therefore, this 560 million US dollars only proves that the conversion capacity of economies in the face of energy disruptions has begun to take shape. This capacity is built on wheels, but its roots lie in the power system, charging network and local manufacturing.

Since it is also electrification, are the paths taken by China and Southeast Asia the same?

China and Southeast Asia,

why have they taken two different paths?

The answer given by China is system-level.

In September 2026, the sales share of fuel vehicles in China's passenger car market fell below one third for the first time, and the overall penetration rate of new energy vehicles rose to 67%. Five years ago, fuel vehicles still accounted for more than 90% of the market.

This conversion speed is rare in the history of the global automotive industry.

The International Energy Agency estimates that in the second quarter of 2026, new energy vehicles alone brought China a daily crude oil substitution equivalent to 1.5 million barrels, roughly equal to France's total daily oil consumption. The International Energy Agency also predicts that China's oil demand will peak in 2027, about two years earlier than previously forecast.

Changes on the demand side are only half of the picture. The supply side is also advancing simultaneously: one out of every 3 kWh of electricity consumed in China comes from clean energy.

The 15th Five-Year Plan proposes that by 2030, the share of non-fossil energy power generation will reach 50%, and the installed capacity of wind power and solar power will exceed 50% of the total.

In this context, China's path is clearly large-scale electrification on the demand side, simultaneous decarbonization on the supply side, maintaining scale advantages on the power grid side, and forming industrial clusters on the manufacturing side.

The four links back each other up: if one link encounters a problem, the other links can still make up for it.

This structural redundancy is the underlying reason why China can significantly reduce crude oil imports during crisis periods and hedge against global supply gaps. Reserves and diversified import patterns are important foundations, but it is the reshaping of the energy market structure itself that truly expands the room for adjustment.

The situation in Southeast Asia is completely different. 60% of the region's crude oil imports depend on the Middle East, and 45% of its refined oil products come from Middle Eastern crude oil. Once the Strait of Hormuz is disrupted, the vulnerability will be exposed immediately.

But its electrification path cannot copy China's model.

Data from the International Energy Agency shows that the growth rate of electricity demand in Southeast Asia is already twice the growth rate of total energy consumption, and the incremental electricity demand in the next 10 years may be equivalent to Japan's current total power generation. Data centers also take up a large share: data centers in Southeast Asia consume nearly 3% of the world's electricity and about 10% of the Asia-Pacific region's total, and the queuing capacity for grid connection is still rising.

Manufacturing industries in Vietnam, Thailand and Malaysia are expanding rapidly, while Laos, Cambodia and Myanmar are improving power grid coverage and cross-border power trade. In terms of power supply structure, hydropower is the cornerstone, with an installed capacity of 60 GW and power generation of 225 TWh in 2024, accounting for 15% of the region's total power generation; solar power is the fastest growing, with installed capacity exceeding 45 GW in 2024, with an average annual growth rate of about 35% in the past 10 years; geothermal energy is concentrated in Indonesia and the Philippines, meeting about 5% of the region's energy demand; nuclear power is still in the planning stage, with Indonesia, the Philippines and Vietnam all setting targets for the 2030s.

In this environment, electrification in Southeast Asia is more like an archipelago-style modular puzzle, with multiple countries, multiple power sources, multiple systems and multiple goals advancing at the same time, and the coordination difficulty between them is very high.

Vietnam has formed a closed ecosystem with VinFast and the V-Green charging network, with more than 150,000 charging ports across the country, and is expanding to long-distance hubs and electric motorcycle battery swapping stations.

Thailand, as the largest automotive production center in Southeast Asia, uses replacement plans and incentive policies to stabilize the pace of transformation.

Indonesia links nickel resources with energy storage routes, and clarifies the positioning of battery energy storage, pumped storage and long-duration energy storage in the power system. Malaysia uses CKD tax incentives and local assembly to build a compliance hub.

Singapore follows a high-value market path.

Each module can operate independently, but the connection between modules, such as cross-border power trade, regional power grid balancing, and competition for electricity consumption between data centers and electric vehicles, is the real challenge.

However, there are still risks in Southeast Asia using electric vehicles to replace oil. If batteries, photovoltaic modules and power grid equipment are heavily dependent on imports, the dependent object will change from oil exporters to green equipment exporters, and energy security will just change its name, while the vulnerability may not disappear at the same time.

What can truly change the situation is local assembly, battery industry chain and mineral refining capacity.

According to available data, Southeast Asia holds about 51% of the world's nickel reserves, 20% of bauxite reserves, 17% of tin reserves, and considerable cobalt and copper reserves. By 2030, the region's manufacturing capacity for battery cells, anodes and cathodes is expected to grow by 4 times, 2 times and 7 times respectively, battery manufacturing capacity will more than double, and electric vehicle production capacity may increase by more than 10 times.

Whether these figures can be realized depends on the intensity of resource nationalism, the progress of localization in the refining sector, environmental protection and financing conditions.

If the path is successfully taken, the dependence on green imports will gradually be reduced; if not, the story of replacing oil will only be half completed.

China is advancing three layers simultaneously: shifting from oil to electricity for vehicles, shifting from fossil fuels to clean electricity for the power grid, and shifting from whole vehicle imports to local manufacturing.

Southeast Asia is moving fast on the first layer, the second layer is squeezed by power grids and data centers, and the third layer is driven by policies.

This difference is precisely why Chinese automakers' landing methods in Southeast Asia have shifted from exporting whole vehicles to focusing on local assembly.

BYD is no longer building new factories,

how should overseas expansion be implemented?

BYD's adjustment in Malaysia follows this logic.

The company has selected Inokom, a Malaysian automotive assembly enterprise, as its local production partner, and shelved the plan to build its own factory in Tanjung Malim, Perak. Inokom is located in Kulim, Kedah, and is affiliated to Sime Darby Motors. The two parties have signed a memorandum of understanding in Shenzhen. Sime Darby was originally BYD's distribution partner in Malaysia, and this cooperation extends from sales to production.

Why did this shift happen? It is related to policy changes in Malaysia.

Malaysia's special tax incentives for fully imported electric vehicles expired at the end of 2025. Starting from July 1, 2026, relevant imported vehicles need to meet a CIF declared value of no less than 200,000 ringgit and a minimum power requirement of 180 kW.

The CIF declared value includes vehicle cost, insurance and freight, excluding local taxes and sales link fees.

Many of BYD's models are priced below 200,000 ringgit, and continuing to import whole vehicles will bring significantly more constraints.

Therefore, local assembly has become very important.

Adopting the CKD mode of importing spare parts and assembling locally is subject to a different set of policies. According to data from the Malaysian Investment Development Authority, the import tax, consumption tax and sales tax incentives for locally assembled electric vehicles and related parts will continue until the end of 2027.

This leaves room for automakers to control costs and maintain price competitiveness.

Then why not continue to build self-owned factories? The reason is that new projects need to meet additional production and sales conditions.

The Ministry of Investment, Trade and Industry of Malaysia previously announced that BYD's original project was approved with a local annual sales volume of 10,000 units, equivalent to 20% of the planned production capacity, and the project was positioned as export-oriented.

For enterprises that hope to expand local sales through local production, this means that most of the production capacity needs to be arranged for overseas markets separately, and the return on investment needs to be recalculated. The department also clarified that projects that use existing local assembly facilities are not subject to these new investment conditions.

This policy opening directly makes cooperative assembly a more realistic choice.

Inokom's manufacturing foundation can support this choice. Sime Darby disclosed in June this year that Inokom has produced automobiles for brands such as BMW, Porsche, Mazda, Hyundai and Chery, and has body, painting and final assembly facilities and more than 2,700 employees.

BYD can use ready-made factories, personnel and production experience to promote assembly, saving the preparation time of building a new factory from scratch.

Market competition is also driving this adjustment. According to local registration data, in the first nine months of 2026, Proton's electric vehicle registrations reached 24,857 units, while BYD's reached 8,087 units. BYD was still the local electric vehicle sales champion last year, but this year it is facing strong competition from local brands. Cooperative assembly has secured BYD the conditions to continue participating in the competition.

The company said in a statement that it hopes to bring new energy vehicle and battery technologies closer to the Malaysian market, and deepen its business through local partners.

From a broader perspective, to a certain extent, it reflects the changes in the pattern of global automotive trade.

In the past, the core action of automakers going global was to build cars, ship them overseas and sell them, competing on product strength and channels. Now, the core action of going global has become understanding the expiration curve of tax incentives, clarifying local content rate requirements, finding suitable partner production capacity, and arranging rules of origin.

Whole vehicle imports face tax differences and thresholds, greenfield investment faces sales and export proportion constraints, and cooperative CKD mode distributes the cost of regulatory compliance to local partners, reducing capital expenditure and speeding up market entry.

This capability can be called institutional engineering capability, which is becoming one of the core competitiveness of automakers' globalization.

Therefore, I believe that more Chinese automakers will follow the CKD plus local partner model next, and Malaysia is likely to become one of the ASEAN multi-brand CKD hubs.

However, CKD benefits from the dividend of the policy window period, and it is not a permanent moat.

After the tax incentives expire at the end of 2027, the local content rate requirements will most likely be upgraded, and partner production capacity and bargaining power will become new bottlenecks. What automakers really need to build is the capability to integrate compliance, localization and partnerships, rather than just the capability to sell cars.

Only when this capability is built can long-term rooting in the era of rule-based trade be possible.

Apart from penetration rate, four more things need to be focused on

Trading on the "penetration rate curve" can no longer fully explain the changes in Southeast Asia's electric vehicle market.

The penetration rate tells you how many cars have been sold