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

The Rationale behind the US-ASEAN Electric Vehicle Initiative

A Tesla Model S electric vehicle is displayed during an exhibition in Zhengzhou city, Henan province, China, on November 4, 2018.

Credit: Depositphotos

As a follow-up to what he promised at the US-ASEAN Special Summit earlier this year, President Joe Biden proposed the establishment of a US-ASEAN Electric Vehicle Initiative at this month’s US-ASEAN Summit in Cambodia.

In announcing the initiative, the flagship initiative of the US-ASEAN Transportation Dialogue Partnership, Biden hopes to work with his ASEAN counterparts to create an integrated electric vehicle (EV) ecosystem in Southeast Asia. In particular, the initiative will focus on the development of the region’s EV infrastructure, the adoption of EVs throughout the region, and the development of EV solutions and technologies for the region. In addition, the United States will also help the ASEAN to create an ASEAN road map for the implementation of electric vehicles.

First, the Initiative should be understood as an extension of the Biden administration’s domestic agenda. Biden’s passion and support for US-made EVs was evident even during his presidential campaign. In addition to stating that EVs are the future of the American auto industry, he promised to take a more active role in supporting the development of US EVs. Recently, Biden even said that EVs are integral to restoring America’s greatness.

Since taking office, Biden has taken concrete steps to promote the production and adoption of electric vehicles in the United States. With the bipartisan Infrastructure Investment and Jobs Act, for example, the Biden administration can invest $7.5 billion in electric vehicle chargers, more than $7 billion in providing critical minerals and other components necessary for EV battery production, and over $10 billion for cleanup. transport and school buses. Although there are no articles in the recently passed Science and Chips Act that specifically address EVs, the Act will also stimulate their development, as adequate and advanced chips are essential for the future of EVs. In doing so, the Biden administration is trying to create a basis for a boom in electric vehicle manufacturing and the electric vehicle supply chain in the United States.

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Given the huge market potential of Southeast Asia, the US-ASEAN Electric Vehicle Initiative can facilitate electric vehicle trade between the United States and the region and create more export opportunities for electric vehicle manufacturers with factories in the United States. Working with ASEAN is also vital for the US in the sense that the region’s lower labor costs and abundance of minerals essential for the production of electric vehicles will assist the US in establishing a more secure supply chain.

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Second, the Initiative can also serve as part of the US strategy to compete with China for global EV leadership. The Biden administration has long been dissatisfied with the US market share of EVs, especially compared to China. Since then he has promised “competition against China” in the electric vehicle industry. In recent years, an increasing number of Chinese electric vehicle manufacturers have entered Southeast Asia and are eyeing business expansion in the region. For example, BYD, Great Wall Motor (GMW), Hozon, and Aiways have all delivered their electric vehicles in Southeast Asian countries. SAIC-GM-Wuling (SGMW) and BYD have localized their own EV productions in Indonesia and Thailand. In addition, BYD has partnered with the Singapore Science, Technology and Research Agency on the research and development of an EV system for public transport.

It appears that China’s efforts have already yielded some positive results. Data shows that the market share of Chinese EV makers in Thailand is expected to rise from 58 percent in 2021 to around 80 percent this year. With the new initiative, the Biden administration appears to be looking beyond the cars themselves in competing with China in Southeast Asia; it aims to shape the region’s EV ecosystem with US solutions and technologies, from EV production to the creation of EV infrastructure, such as charging stations.

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Shortly after the Biden administration decided to launch the US-ASEAN Electric Vehicle Initiative in Cambodia, China’s state media company Global Times said the US was only using a “symbolic gesture” to woo ASEAN rather than cooperating to “achieve real. A prosperous and peaceful ASEAN,” as China claimed was its goal.

But America’s promises to Southeast Asia will probably not be matched by a commitment of resources. Addressing the US-ASEAN Summit in Phnom Penh this month, Biden announced that he has requested $825 million for all forms of aid to Southeast Asia in 2023, which is just a drop in the bucket in terms of needs the region. While Biden could pay for more EV projects in Southeast Asia, it remains unclear how much follow-through there will be.

Regardless of the outcome, the announcement of the initiative will undoubtedly intensify the already intense EV competition in Southeast Asia. While the Biden administration is taking a more defensive and introspective approach toward its allies when it comes to EVs, the initiative is one of the first US efforts to cooperate internationally on EVs, along with another recent agreement with Mexico. Given that the US will “compete vigorously” with China, it is likely that the EV industry, especially the one in Southeast Asia, will soon become another hotspot of Sino-American competition .

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