CosMX Battery/REPT Battero/EVE and other Chinese companies are "heading south"! Why are the first overseas factories of Chinese enterprises clustering in Southeast Asia?

Recently, data released by Thailand's Ministry of Industry showed that in Q1 2025, the number of Chinese automotive parts enterprises registered in Thailand reached 420, a threefold increase from 2020. Their share of foreign-funded enterprises surged from 7% to 22%.

The Thailand Board of Investment (BOI) forecasts that by 2030, the total investment by Chinese parts enterprises in Thailand will exceed $5 billion, driving up the proportion of new energy vehicle (NEV) production in Thailand from the current 5% to 30%.

Dianchiwang has noticed that in recent years, Chinese lithium battery enterprises have collectively "moved south" to Southeast Asia, accelerating their local factory construction and layout, with many enterprises establishing their first overseas factories in the region.

This year alone, several companies have announced new developments, forming a layout of the "materials-battery cell-module-complete vehicle" entire industry chain in Southeast Asia.

Chinese Lithium Battery Enterprises Collectively "Moving South" to Southeast Asia

Complete Vehicle SectorOn May 16, Changan Automobile (000625) inaugurated its first overseas NEV production base, the Rayong Factory in Thailand. With a total investment of approximately 10 billion Thai baht, the factory has an existing capacity of 100,000 units per year, which will be gradually expanded to 200,000 units per year in the future.

Battery SectorIn January, CosMX Battery (688772) laid the foundation for its new energy project in Malaysia, with a total investment expected not to exceed 2 billion yuan. The project is scheduled to commence production by the end of 2025. The Malaysia project is its first overseas production base, aiming to improve its global manufacturing network, get closer to international customer needs, and enhance supply chain efficiency and risk resistance capabilities.

REPT Battero (00666.hk) announced in January its decision to invest in and construct a battery factory in Indonesia. Upon completion of the first phase, the factory is expected to have an annual production capacity of 8 GWh of power and ESS batteries and systems, as well as battery components. This factory is also its first overseas battery factory.

In January, Vietnam Jingneng Technology Co., Ltd. (hereinafter referred to as Jingneng Technology), a wholly-owned subsidiary of Highpower International (001283), also held a factory inauguration ceremony. This factory is Highpower International's first overseas factory, mainly producing lithium batteries, nickel–metal hydride batteries, and other products.

In February, Primat (002324) announced that its majority-owned subsidiary, Highstar, plans to invest in and construct a 2.5 GWh cylindrical battery base project in Malaysia, with a total investment of approximately 750 million yuan. At a recent project signing ceremony, Highstar stated that the factory will become the company's first overseas battery cell factory to achieve mass production and delivery. Its products will not only meet the demands of the Southeast Asian market but also radiate to important global markets such as Europe and North America.

EVE (300014) held a ceremony in February to mark the roll-off of the first battery from its Malaysia factory, signaling the start of production and operations at EVE's first overseas factory. The factory has a high-quality production capacity of 680 million cylindrical batteries per year. EVE also disclosed in its annual report that the ESS project at its Malaysian factory is progressing steadily according to the established plan, with mass production expected to commence in early 2026 to support global overseas deliveries.

In March, the Thailand Board of Investment (BOI) announced the approval of Sunwoda (300207)'s investment of over THB 50 billion (approximately RMB 10.725 billion) to construct a battery factory in Thailand, which will become the country's first large-scale battery production investment project dedicated to EV power batteries.

KELU Electronics (002121) announced in March its plan to establish an ESS production site in Indonesia, with an overall investment planned for a 3GWh capacity.

In March, Shuangdeng Group submitted a prospectus to the Hong Kong Stock Exchange, aiming to raise funds through an IPO, primarily for the construction of a lithium-ion battery production facility in Southeast Asia.

In April, Tenpower, a wholly-owned subsidiary of Azure (002245), announced the official opening of its factory in Selangor, Malaysia. This factory is Tenpower's first overseas facility to commence full-scale production, with a total Phase 1 capacity of approximately 400 million units per year.

Materials and Other PartsIn February, Huayou Cobalt (603799) announced that Huaneng New Materials (Indonesia) Co., Ltd. held a ceremony to mark the full mechanical completion of Phase 2 of the "50,000 mt/year High-Nickel Ternary Cathode Precursor Material Project for Power Batteries." With this, the first and second phases of Huayou Cobalt's new energy lithium battery ternary material entire industry chain project in Indonesia have been fully completed.

In April, Capchem (300037) announced its plan to establish an electronic chemicals production site in Kedah, Malaysia, with a total planned investment not exceeding US$26 million. The construction will include electronic chemicals such as lithium-ion battery electrolytes.

Jinyang Co., Ltd. (301210) announced in April its plan to invest in the construction of a precision structural components project for lithium batteries in Malaysia, with a total investment not exceeding US$90 million (approximately RMB 657 million).

In April, Shenzhen Senior Technology Material (300568) announced that its high-performance lithium-ion battery separator production site in Penang, Malaysia, will have a production capacity of 2 billion m² of wet-process separators and coated separators upon completion and reaching full production, with production expected to commence in mid-2025. Shenzhen Senior Technology Material also announced in February its plan to utilize the previously raised but unutilized funds of RMB 2.08 billion for the wet-process and coated separator projects in Malaysia.

In April, GEM (002340) announced that it, together with South Korea's ECOPRO, will jointly construct the IGIP Park in Indonesia and implement the IGIP Project, jointly invest in a high-pressure leaching project for laterite nickel ore, and establish a joint venture to build a cathode material factory with an annual capacity of approximately 200,000 mt.

In addition, in April, the groundbreaking ceremony for the second phase of the 120,000 mt/year LFP cathode material production site of Indonesia Lithium Source, a subsidiary of Lopal (603906), was held in Semarang, Indonesia.

Multiple Driving Factors: Southeast Asia Emerges as a Hotspot for Lithium Battery Industry Investment

Why Are Chinese Lithium Battery Companies Establishing Their First Overseas Factories and Multiple Industrial Projects in Southeast Asia?

Recently, the head of a lithium battery equipment company told China Battery Network that behind the efforts of Chinese companies to tap into the Southeast Asian market lie multiple driving factors, including a favorable policy environment, market demand, resource endowments, and low labor costs. Upstream companies in materials and equipment often follow their major battery customers to go global.

I. Driven by Incremental Market and Policy Dividends

In recent years, governments across Southeast Asia have introduced policies to support the development of the new energy industry and actively promoted the construction of infrastructure such as charging piles. For example, the Thailand Board of Investment (BOI) stipulates that foreign-invested automakers investing over 5 billion Thai baht can enjoy an 8-year corporate income tax exemption and import duty exemptions for equipment. For industries related to new energy, in addition to corporate income tax exemptions, there may also be exemptions from import duties, VAT, and consumption taxes on machinery, equipment, and raw materials.

Furthermore, several Southeast Asian countries, including Thailand, Indonesia, and Malaysia, have introduced subsidy policies for EV purchases and implemented tax exemptions for EV acquisition to further alleviate the burden on consumers when purchasing EVs.

Recently, the Indian government announced a significant investment plan totaling 20 billion Indian rupees (approximately 1.684 billion yuan). Under this plan, named "PM E-Drive," the Ministry of Heavy Industries (MHI) intends to deploy approximately 72,000 public charging stations nationwide, with a focus on 50 national highway corridors.

Governments across Southeast Asia are actively promoting the electrification of the automotive industry. The Southeast Asian automotive markets, represented by Thailand, Indonesia, and Malaysia, are experiencing robust growth in the production and sales of new energy vehicles. Meanwhile, due to the weak power grid infrastructure and rapid development of renewable energy in Southeast Asia, there is a growing demand for ESS batteries.

The continuously expanding incremental market space is the core driving force attracting investments from Chinese companies and others.

A recent report released by the International Energy Agency (IEA) indicates that Southeast Asia will become one of the key engines for global energy demand growth over the next decade, accounting for 25% of the increase in global energy demand by 2035.

The report points out that electricity demand in Southeast Asia will grow at a rate of 4% per year, and expanding clean energy investments is crucial for reducing emissions in the region. Currently, Southeast Asia only attracts 2% of global clean energy investment. The International Energy Agency suggests that to achieve its climate goals, Southeast Asia needs to increase its clean energy investment fivefold by 2035, reaching US$190 billion.

II. Avoiding Trade Barriers and Tariff Risks.

In recent years, China has steadily expanded its clean energy cooperation with Southeast Asian countries, engaging in comprehensive, multi-level, and broad-based strategic cooperation. Chinese enterprises have already developed strong competitiveness in the clean energy construction and investment markets of Southeast Asia.

Moreover, Southeast Asian countries have relatively favorable trade agreements with Europe and the US. Amidst the US's arbitrary imposition of excessively high tariffs on China and the EU's tariff hikes on Chinese EVs, Chinese enterprises are compelled to establish localized production facilities in Southeast Asia, re-exporting to the European and US markets, thus achieving a leap from "product going global" to "industry going global."

III. Resource Endowment and Cost Advantages.

Southeast Asia boasts unique geographical advantages and resource endowments. Indonesia and the Philippines hold nearly half of the world's nickel reserves, providing a solid raw material guarantee for battery production.

In addition, Southeast Asian countries are actively seeking to transform themselves from resource exporters into high-end manufacturing centers. As a "value trough" in terms of labor, land, and energy costs, they have attracted numerous global automakers to establish production lines there. Currently, Chinese automakers such as BYD, SAIC, Great Wall, Changan, GAC Aion, and Geely have already set up factories in Southeast Asia. The implementation of these automaker projects has also attracted Chinese battery, material, and equipment enterprises to expand into Southeast Asia, going global in groups.

Furthermore, as the world's largest overseas Chinese community, Southeast Asian countries not only maintain profound roots in Chinese culture but also form a natural emotional connection in the consumer market. This cultural bond effectively reduces the market recognition barriers for Chinese new energy brands. By accurately grasping cultural resonance and adopting product localization strategies, Chinese enterprises can accelerate the establishment of consumer trust and seize the first-mover advantage in this potential market of Southeast Asia.

Conclusion: The collective "southward march" of Chinese lithium battery industry chain enterprises is a strategic choice to respond to global trade changes, seize emerging markets, and optimize resource allocation. In the short term, this layout will strengthen China's dominant position in the global lithium battery industry chain. In the long run, Southeast Asia may become a testing ground for China's technological standards and business models to go global, not only avoiding European and US trade barriers to a certain extent but also leveraging local nickel and cobalt resource advantages to form a cost moat.

Of course, transitioning from mere product exports to the "going global" of the entire industry chain, enterprises also need to balance opportunities and risks, remaining vigilant against challenges such as the instability of new energy policies in Southeast Asia, environmental protection regulations, differences in labor culture, and insufficient industrial support. In addition, in the future, as the new energy market in Southeast Asia matures, challenges in areas such as technological iteration and market adaptability will also intensify.