The global electric vehicle (EV) market is undergoing a significant shift, with production moving to regions where policy and logistics make economic sense. Recently, BYD shipped 959 Thailand-built EVs to Europe, despite the European Union imposing tariffs on China-made EVs. This move highlights the importance of establishing supply chains in regions with favorable policies, such as Southeast Asia. The United States, in particular, needs to reassess its approach to EV production, as its current tariffs on Chinese EVs have not altered the fact that US brands rely on non-Chinese and non-US nodes for key components.
Thailand, Malaysia, and Indonesia are emerging as crucial players in the EV supply chain. Thailand is becoming the region’s auto hub, with new investments in battery and EV production. Malaysia is a precision manufacturing hub, supplying critical components such as bearings and machined parts. Indonesia is a key producer of minerals and mid-stream battery materials, including nickel and anode materials. To secure a stable and resilient EV supply chain, the US should establish “cumulation corridors” with these countries, allowing parts to earn preferential treatment if value is added within the corridor and suppliers meet digital audit standards.
The US should prioritize speed and auditability in its policy approach. This can be achieved by setting guaranteed determination windows for origin rulings, creating a green lane for certified suppliers, and co-funding metrology and failure-analysis labs in Southeast Asia. By doing so, the US can reduce working capital trapped at ports, cut delays, and increase the competitiveness of its EV industry. Furthermore, the US should match incentives to auditability, requiring live dashboards for corridor shipments and publishing monthly statistics on ruling times and exceptions.
The current tariff regime and ideological approach to decarbonization are not effective in achieving the desired outcomes. Instead, the US should focus on building a nearby, non-Chinese, and rules-compliant base for EV parts. Southeast Asia is already building this base, and the US should meet it halfway to secure a stable and resilient EV supply chain. By adopting a more pragmatic and logistics-focused approach, the US can accelerate its energy transition and remain competitive in the global EV market.