Japan, ASEAN to formulate joint automobile strategy to combat China's EV dominance

To counter China's increasing influence in the electric vehicle (EV) market, Japan and the Association of Southeast Asian Nations (ASEAN) are set to unveil their inaugural joint strategy for automobile production and sales within the region.

This collaborative initiative, as reported by the Nikkei newspaper on Monday, aims to establish a solid framework by 2035, focusing on several strategic areas including decarbonisation, mineral resource procurement, and investment in next-generation automotive technologies.

Scheduled for discussion during the economic ministers' meeting between Japan and ASEAN members, potentially as early as September next year, the strategy will address the growing necessity for enhanced cooperation in personnel training and sustainable production practices.

Key aspects of the proposed strategy include the promotion of biofuels and other next-generation technologies.

The strategy will also emphasise the importance of securing mineral resources crucial for EV production, thereby ensuring a stable supply chain that supports both Japanese and ASEAN automakers.

To support these objectives, Japan plans to utilise 140 billion yen ($899.51 million) allocated by its Ministry of Economy, Trade, and Industry.

This budget, aimed at assisting the Global South, will primarily fund personnel training programs.

These programs are designed to enhance the skills and capabilities of the workforce within the ASEAN region, thereby fostering a more competitive and innovative automotive industry.

This strategic move follows significant developments within Japan's automotive sector, particularly from industry giants like Honda Motor.

Last week, Honda announced that it would double investments in electrification and software, amounting to approximately $65 billion through fiscal 2030.

This investment is a direct response to the intensifying competition from Chinese automakers such as BYD, which have been rapidly advancing their market presence and technological prowess.

By forging this joint strategy, Japan and ASEAN aim to create a resilient and collaborative automotive ecosystem that not only counters external competition but also promotes sustainable growth and innovation within the region.

This partnership is set to play a crucial role in the global automotive market, as both regions strive to maintain their competitive edge amidst the accelerating shift towards electric mobility.

Overall, this initiative represents a significant step towards greater economic integration and cooperation between Japan and ASEAN, setting the stage for a more sustainable and technologically advanced automotive industry.

(With inputs from Reuters)