The outlook for manufacturing and trade

Southeast Asia’s clean energy technology market grows faster than the global average in the Stated Policies Scenario (STEPS), more than tripling to reach over USD 80 billion in 2035. Batteries and electric cars account for over 90% of the value. In the Current Policies Scenario (CPS), the market reaches some USD 55 billion by 2035, mainly due to weaker growth in the electric car market.

By 2035, electric car production exceeds 3.6 million units in the STEPS, nearly twelve times more than in 2025, with exports accounting for nearly 35% of output and establishing the region as a net exporter. Exports are primarily destined for Europe, Australia and New Zealand. The region’s cost competitiveness is underpinned by strong manufacturing project pipelines for batteries and electric cars and by supportive industrial policy frameworks.

The battery manufacturing industry develops alongside the electric vehicle (EV) industry, with output increasing from just a few GWh today to over 300 GWh in 2035 in the STEPS. Upstream, anode and cathode active material industries look set to be largely export-oriented in the STEPS, providing an important source of supply chain diversification.

In both the STEPS and CPS, solar PV module production falls sharply by 2035 as declining exports to the United States – Southeast Asia’s largest export market in recent years – are not offset elsewhere. Exports fall from the peak of USD 20 billion reached in 2023 to around USD 3.6 billion in 2035 in the STEPS.

Announced electrolysis projects in Southeast Asia are equal to 12% of current regional hydrogen demand, but only 6% of announced capacity has reached final investment decision (FID). The main opportunities to use low-emissions hydrogen to produce low-emissions fuels lie in targeting existing applications based on hydrogen produced from unabated fossil fuels.

In the Announced Industrial Policy Case (AIPC) – in which countries achieve their industrial policy and diversification ambitions – global production diversifies across all clean energy technologies. Cumulative investment in Southeast Asia increases by around USD 14 billion to 2035 relative to the STEPS, largely in the battery supply chain.