Asia will be at the center of the EV era. The region has much of the resources needed for the sector (Indonesia), highly supportive policies (China), and industry-leading technology (Korea, China, Japan). A batch of Asian firms are eclipsing entrenched players, not least in China, which has a larger EV market than the rest of the world combined.
This is according to a report titled, “Glimmers Of Winners Emerge In Asia’s EV Push.”
“The emergence of electric vehicles (EVs) will prompt dozens of Asian enterprises to raise tens of billions of dollars,” said S&P Global Ratings credit analyst Claire Yuan. “Heavy investment into EVs will push up leverage and strain credit metrics for some entities. Some firms will thrive and some will get left behind.”
To get a sense of how this will play out, we consider likely winners and losers in Asia as the EV industry emerges. “In the broadest strokes, Chinese companies are the frontrunners in the global EV race, Korean firms are catching up, and Japanese entities are trailing,” said Yuan.
Upstream, firms have committed about $30 billion in announced investments into the Indonesian nickel sector.
Midstream, Asian firms will continue to dominate global EV battery supply for the next two to three years at least. According to S&P Global Mobility, producers in the region collectively accounted for 98% of the global battery cell supply in 2022. This share will likely stay above 90% by 2025.
Downstream, supportive government policies, a well-established supply chain, and widely available charging infrastructure have established China as the clear EV frontrunner. In 2022, the country generated over 60% of global EV sales.
“While the immediate focus is on rising leverage and squeezed margins, the opportunities for the region’s miners, battery firms, and carmakers are large,” said Yuan.