China's electric car makers look to Thailand for next sales boost

China’s electric car makers look to Thailand for next sales boost

In Europe, a group of Chinese automakers are trying to get rid of old brands.

in EuropeA group of Chinese automakers are trying to get rid of old brands. Half a world away from the bustle of the Paris Motor Show, a similar revolution is taking place in Southeast Asia, in Thailand, where Chinese car manufacturers are facing off against Japanese incumbents.

In September, BYD, China’s largest maker of electric and hybrid vehicles, announced plans to build its first electric outboard passenger Sentences Factory in Rayong, a coastal city southeast of Bangkok. Days ago, the 10,000th battery-powered car rolled off the production line of Great Wall Motor Co. in the same city, while Shanghai-based Hozon New Energy Automobile opened its first Thai showroom in the capital’s glittering Central Rama 2 shopping mall.

Chinese automakers aren’t just setting up shop and building supply chains. China It also exports a record number of new energy vehicles to Thailand — about 59,375 units from January through September, up 176% over the same period in 2021, according to data from the China Passenger Car Association. Thailand now ranks third as an export destination for Chinese electric vehicles, after Belgium and United kingdom.

One reason for the allure can be found in Thailand’s past, and the desire to benefit from this experience while the world becomes green. Thailand’s position as the largest auto manufacturing center in Southeast Asia and 10th in the world has earned it the title of Detroit Asia. Its comprehensive supply chain feeds dozens of factories, mainly owned by Japanese companies, that produce cars with internal combustion engines.

In February, Thailand became the first country in the region to provide cash subsidies – up to 150,000 baht ($4,000) – for electric vehicles for passengers. The government is considering battery subsidies to further reduce costs, a move that would add to about 43 billion baht in tax cuts and incentives for electric vehicles so far.

Battery-powered cars from China are also exempt from most import duties and excises until the end of 2023, although in return, automakers have to commit to producing domestically starting in 2024. Thailand said it wants 30% of its total car production to have electric. by 2030.

“Our policies show how determined we are to become a global hub for electric vehicle production,” Narit Thirdstrasukde, Secretary General of the Board of Investment of Thailand, said in an interview with Bloomberg. “This boosted confidence and brought in many new players. Of course, most of them are from China. And more will likely follow.”

In fact, foreign direct investment from China doubled in the first nine months of 2022 compared to last year, government data shows. Much of that investment has flowed into the electric vehicle sector in Thailand, Narit said.

“The incentives are piling up,” said Allen Tom Abraham, mobility analyst at BloombergNEF. “This window between now and around 2024 or 2025 gives Chinese automakers an opportunity to export their excess vehicle capacity to Thailand and test the market.”

Under President Xi Jinping’s commitment to net-zero and advancing self-reliance in deep technology, preferential policies have promoted the production and purchase of cleaner cars, and China’s electric car market is now the largest in the world. The sharp domestic scene has spurred rapid innovations in automotive design, high-tech offerings, and other customer-focused services. These affordable and popular electric models are now making their way into markets that were once dominated by Japanese and Western automakers.

“I wasn’t sure about Chinese electric cars at first because of the generally negative perception about products made in China,” said Thanakrit Dosadeponvat. World Health Organization She purchased an Ora Good Cat EV from Great Wall Motor Company in October of last year. “But I fell in love with the attractive design. So I did my research and thought it was worth a try.” He said the car exceeded his expectations.

Thanakrit now runs a Facebook The group, Ora Good Cat Thailand, has over 92,000 members. The group feed is filled with pictures of cool new members’ tours, first-person road trip tales, and threads about maintenance and technical issues.

The retro-looking vehicle with bulbous headlights was the top selling model of electric vehicles in Thailand this year, based on new vehicle registration data from the Ministry of Road Transport. It starts at 763,000 baht – more expensive than China but cheaper than Japanese EV options.

Hozon Auto launched the 549,000 baht NETA V model in September. The model with built-in AI voice assistant tik tok The application has received more than 5,000 applications so far. According to Kasikorn Research Center, the market share of Chinese electric car makers in Thailand is expected to rise from 58% last year to about 80% this year.

“For us, this is Year Zero going global and Thailand is our first stop,” a Hozon Auto spokesperson said. “Because it is a market with high potential, laying the foundation early can give we First mover feature. Thai consumers are also more receptive to Chinese brands due to geography and cultural affinity.”

Although the electric vehicle market in Thailand is still nascent, the demand in the wider region is expected to rise. Home to about 675 million people, sales of electric passenger cars in Southeast Asia are expected to jump from just 31,000 this year to 2.7 million in 2040, according to BNEF.

Japanese incumbents like Toyota Motor Corp find themselves playing catch-up. Toyota, which accounts for about a third of the car market in Thailand, is only planning to launch its first battery electric model in the country later this year.

“Thailand is an important hub for our development, production and exports in Asia, and we have been there for 60 years,” Toyota said in a statement. Toyota would like to offer a range of options on the road to a carbon neutral society. We are confident in our ability to maintain and expand our market share.”

And to be sure, Chinese automakers still have a long way to go. In Thailand, the five largest Japanese automakers have a combined market share of nearly 80%. To compete, Chinese brands will need to build sales and service networks from scratch, as well as trust, which could take decades.

“It’s too early to say whether Chinese brands can dominate,” BNEF’s Abraham said. “Japanese automakers are waiting for sufficient economies of scale before entering the electric vehicle sector,” he said, and that current electric vehicle volumes in Thailand do not justify any major hub at this point.

More competition may change that. BYD’s Atto 3 electric multi-use went on sale this week and Tesla Inc. Expands its presence through a recruitment spree in Bangkok.

“Our international auto show at the end of the year is going to be hot,” Narit said. “Brands we’ve never seen before will launch new models, putting electric vehicles against each other.”

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