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Southeast Asia cannot build a clean-tech strategy on tariff arbitrage
The IEA forecasts solar-module capacity in Southeast Asia could fall to 73 GW by 2030. Battery and EV investment is rising, but the region risks repeating the same mistake unless it builds deeper roots.
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Solar manufacturing in Southeast Asia offers a warning. Factories built around temporary trade advantages can disappear when those advantages vanish. The battery and electric-vehicle boom now sweeping the region needs stronger foundations.
The IEA's Southeast Asia Energy Outlook 2026 presents two diverging trajectories. Solar-module capacity is expected to stagnate or decline, while investment in battery components and EV manufacturing rises sharply.
The temptation is to read this as one technology losing momentum and another taking its place. The more useful lesson concerns why factories locate in Southeast Asia, and what might persuade them to remain.
For years, the region benefited from solar manufacturers establishing production facilities in Cambodia, Malaysia, Thailand and Viet Nam. Many were owned by Chinese-headquartered companies and concentrated in downstream activities such as modules and cells. Upstream components continued to move through vertically integrated international supply chains.
The IEA estimates that Chinese-headquartered companies account for around 60% of Southeast Asia's solar-module manufacturing capacity. The expansion generated exports and investment.
Much of that capacity was oriented toward distant export markets. Its competitiveness depended on decisions made outside the region.
Global manufacturing overcapacity, expanding domestic production in the United States and India, and new anti-dumping and countervailing duties altered the industry's economics. Companies began closing facilities or shifting planned investments between countries. Viet Nam's module capacity could fall by 2030 to less than 40% of its 2024 level, the IEA projects.
Across Southeast Asia, solar-module manufacturing capacity stood at around 100 GW at the end of 2024. The IEA projects it could decline to roughly 73 GW by 2030.
This does not mean export manufacturing or foreign investment has failed. Both remain central to the region's development. The solar experience instead shows how quickly manufacturing capacity can be rearranged when its competitiveness depends more on access to one export market than on demand and suppliers rooted in the host region.
Factory capacity is not the same as industrial resilience.
The distinction matters as Southeast Asian governments celebrate a new wave of battery and EV investment.
Battery-cell manufacturing capacity increased from 16 GWh in 2023 to 26 GWh in 2024. Projects already committed could raise it above 80 GWh by 2030. Cathode-material capacity could reach 70 GWh, while current announcements suggest regional anode-material capacity may exceed 200 GWh.
Electric-vehicle manufacturing is expanding as well. Around 90,000 electric cars were produced in Southeast Asia in 2024, more than twice the previous year's output. Plants capable of manufacturing EVs could represent more than one million units of annual capacity by 2030. Some of those facilities also produce internal-combustion vehicles, and the share eventually allocated to EVs is not always specified.
The distance between current output and future nameplate capacity does not prove these factories will be underused. It does show why utilisation should become a more important measure of industrial progress than announcements alone.