The Rationale Behind the US-ASEAN Electric Vehicle Initiative – The Diplomat

The Rationale Behind the US-ASEAN EV Initiative

A Tesla Model S electric car is displayed during an exhibition in Zhengzhou, Henan Province, China, Nov. 4, 2018.

Credit: Depositphotos

As a follow-up to his commitment at the special US-ASEAN summit earlier this year, President Joe Biden proposed the US-ASEAN Electric Vehicle Initiative at this month’s US-ASEAN summit in Cambodia.

In announcing the initiative, Biden wanted to work with his ASEAN counterparts to build a comprehensive electric vehicle (EV) ecosystem in Southeast Asia. The initiative is the flagship initiative of the US-ASEAN Transportation Dialogue Partnership. Specifically, the plan will focus on developing EV infrastructure in the region, adoption of EVs across the region, and developing EV solutions and technologies for the region. In addition, the United States will also help ASEAN develop an ASEAN roadmap for electric vehicle implementation.

First, the initiative should be understood as an extension of the Biden administration’s domestic agenda. Even during his presidential campaign, Biden’s enthusiasm for and support for American-made electric vehicles was palpable. In addition to saying electric vehicles are the future of the U.S. auto industry, he also promised to take a more active role in supporting the development of electric vehicles in the United States. Recently, Biden even said that electric vehicles are an important part of restoring America to greatness.

Since taking office, Biden has taken concrete steps to promote the production and adoption of electric vehicles in the United States. For example, through the bipartisan Infrastructure Investment and Jobs Act, a Biden administration could invest $7.5 billion in electric vehicle chargers, more than $7 billion to provide critical minerals and other components needed for electric vehicle battery production, and More than $10 billion for clean energy buses and school buses. Although the recently passed Science and Chips Act does not have a specific provision for electric vehicles, the bill will also stimulate the development of electric vehicles, because sufficient and advanced chips are critical to the future of electric vehicles. By doing so, the Biden administration is trying to lay the groundwork for an electric vehicle manufacturing boom and an electric vehicle supply chain in the United States.

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Given the huge market potential in Southeast Asia, the US-ASEAN Electric Vehicle Initiative could boost EV trade between the US and the region and create more export opportunities for EV makers with factories in the US. Working with ASEAN is also important for the U.S. because the region’s lower labor costs and abundance of minerals critical to electric vehicle production will help the U.S. build a more secure supply chain.

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Second, the initiative could also be part of the U.S. strategy to compete with China for global leadership in electric vehicles. The Biden administration has long been dissatisfied with the market share of electric vehicles in the United States, especially compared with China. It has since vowed to “surpass China” in the EV industry. In recent years, more and more Chinese EV makers have entered Southeast Asia with an eye on business expansion in the region. For example, BYD, Great Wall Motor (GMW), Hozon Motors and Aiways have all delivered EVs in the Southeast Asian country. SAIC-GM-Wuling (SGMW) and BYD have localized their EV production in Indonesia and Thailand, respectively. In addition, BYD is also working with the Singapore Agency for Science, Technology and Research to jointly develop electric vehicle systems for public transportation.

It appears that China’s efforts have yielded some positive results. The market share of Chinese EV makers in Thailand is expected to rise from 58 percent in 2021 to around 80 percent this year, the data showed. With the new initiative, the Biden administration appears to be moving beyond the car itself as it competes with China in Southeast Asia; it aims to use U.S. solutions and technology to shape the region’s EV ecosystem, from EV production to charging stations and more. Creation of automotive infrastructure.

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Shortly after the Biden administration decided to launch the US-ASEAN electric vehicle initiative in Cambodia, the Chinese state-run Global Times commented that this was only a “symbolic gesture” by the US to win over ASEAN, rather than cooperation “to achieve real goals.” A prosperous and peaceful ASEAN”, as it claims, is China’s goal.

But U.S. commitments to Southeast Asia will likely not be matched by resource commitments. Biden announced at the US-ASEAN summit in Phnom Penh this month that he had requested $825 million in various aid to Southeast Asia in 2023, a drop in the bucket compared to the region’s needs. Although Biden may invest in more electric vehicle projects in Southeast Asia, it is unclear how much will follow.

Regardless of the outcome, the announcement of the initiative will undoubtedly intensify the already fierce EV competition in Southeast Asia. While the Biden administration has taken a more protective and introverted approach to electric vehicles with its allies, the initiative is one of the United States’ first attempts at international cooperation on electric vehicles, along with another recent agreement with Mexico. In view of the fact that the United States will “compete fiercely” with China, the electric vehicle industry, especially in Southeast Asia, is likely to soon become another hot spot in the competition between China and the United States.

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