Chinese electric vehicle champion BYD marked the opening of its first factory in Southeast Asia on July 4—a USD 486 million facility in Thailand’s Rayong province—with hefty price cuts for local buyers.
The move, which has seen the Atto 3 SUV discounted by up to THB 340,000 (USD 9,234), reflects the fierce competition facing EV producers and other automakers in Thailand, where an economic slowdown and a rise in car loan rejections are weighing on sales.
But the factory is not intended to serve only the local market. Most of its 150,000 annual capacity would be exported elsewhere in Southeast Asia and to Europe, the company said when originally announcing the plant.
The opening also came on the first day that Chinese EV makers face new tariffs in Europe, one of China’s most important export markets. The duties, levied in addition to the existing 10% tariff, are an attempt by the EU to even the playing field for its own brands against China’s heavily subsidized automotive industry.
China has denied its use of subsidies is unfair, saying its EV industry has gained an edge thanks to its technology and supply chains. The additional tariff of 17.4% on BYD vehicles is among the lowest imposed by the bloc.
Analysts foresee a limited impact on Chinese carmakers, as only 10% of their exports went to western Europe between January and April. But that means more of the excess inventory that began piling up in China as domestic consumption slowed could spill into markets in its neighborhood, warn analysts and local industry players.
“China is still destocking. There might be more cars sent to Southeast Asia because they can’t send them to Europe, and there is zero [additional] tariff in Thailand,” said Krungsri Securities analyst Naruedom Mujjalinkool.
Chinese makers have made rapid inroads into Thailand’s auto market thanks in part to low trade barriers. The Thai government offers reduced tariffs on finished cars and components imported by EV makers while they build local factories.
Thai drivers looking to switch to electric cars prioritize affordability and availability. EVs have also been the one bright spot for Thailand’s weakening auto sector. New registrations of fully electric cars were up 31.64% between January and May from the same period last year, even as overall vehicle sales fell 23.8%.
On average, imported cars have comprised at least 30% of vehicles sold in Thailand each month this year.
At the end of last year, BYD had clinched 40% of the local EV market, helped by generous price offers and slick marketing by its official Thai distributor, Rever Automotive. Chinese peers Neta and Great Wall Motor trailed at 17% and 16%, respectively.
Neta recently announced a 50,000 baht price cut on its V-II SUV, an 8% discount. New models of BYD’s Dolphin hatchback are already 18–26% cheaper than when it was launched in the second half of last year. BYD could offer even deeper discounts, as Thai prices are still about USD 2,700 higher than the domestic price in China.
BYD’s factory in Rayong can produce up to 150,000 cars annually, but may not ramp up to that capacity in its first year. Total monthly output at competitors’ local plants has been under 1,000 units, according to industry insiders. A BYD subsidiary is also building a THB 3.89 billion (USD 105.6 million) plant for electric and plug-in hybrid vehicle batteries before the tariff exemptions end in 2026.
In addition to pressure at home, Thailand’s automotive sector is wary of losing market share to China in Australia, its most important export destination. Australia is set to enforce new vehicle efficiency standards in 2025, joining the vast majority of developed economies that already impose such limits. Last year, EV sales in Australia more than doubled, a worrying sign for Thailand’s primarily internal combustion engine car exports. BYD was outsold in Australia only by Tesla.
Analysts at HSBC remain bullish in their outlook for BYD’s sales volume and market share growth, despite lowering their net profit forecast for the company by 8%. “We believe peers cannot easily replicate the company’s tech leadership, enhanced by a decade of innovation and unique vertical integration capabilities,” they wrote.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.