More Chinese electric vehicle makers are heading into Southeast Asia, hoping to emulate predecessor BYD’s success, but their compatriot’s dominance in the market poses a challenge to their ambitions.
Several of these new players showed off their offerings at the opening ceremony of Thailand International Motor Expo near Bangkok on November 29.
Guangzhou Automobile Group (GAC) unveiled five EV models under its Aion brand, in particular touting the Y Plus sport utility vehicle, with its 500-kilometer standard range, advanced driver-assistance system and THB 970,000 (USD 28,000) price tag.
Entering the Thai market was a long-held goal for GAC and will be a key test of its push overseas. “We will expand our sales and production centers to Southeast Asia, mainland Thailand, as well as the Pacific and Europe,” Aion general manager Gu Huinan said in November.
Changan Automobile showed off two models in its Deepal line, announcing a full-fledged foray into the Thai market.
“We’ll expand our business into Southeast Asia, including Thailand,” Deepal Automobile CEO Deng Chenghao said.
Around 10 Chinese EV makers had entered Thailand or intended to do so as of the end of November, based on company and government announcements and local media—double the tally at the end of 2022.
Automakers like GAC, Changan and Geely, which has plans to enter Thailand, are lured by the market’s fast-growing appetite for EVs. Electric models made up a record 13% of new vehicles sold there in October, based on data from Autolife Thailand. While Toyota Motor led the overall market, nearly 90% of EVs were from Chinese automakers.
Slowing growth in China is also playing a role. The number of passenger vehicles sold there in the first 10 months of 2023 edged up only 0.7% on the year, according to the China Association of Automobile Manufacturers (CAAM), and price competition is fierce. Cultivating new markets has become a must, and Southeast Asia, with its large ethnic Chinese population, looks especially appealing.
Cumulative Chinese EV investment in Thailand has climbed to over USD 1.4 billion, according to industrial park developer WHA. GAC is slated to start up a production facility as soon as next year, and Chang’an in 2025.
But new entrants face a formidable obstacle in the form of compatriot BYD, which held more than half the Thai EV market in October. These companies bring the sedans and SUVs they offer in China into Thailand, where they run head-on into BYD, which already dominates those market segments.
“New players don’t have the technical or product development capabilities of BYD — it’s a tough act to follow,” said Hajime Yamamoto at the Nomura Research Institute’s Thai arm.
BYD’s grip is reflected in its presence at the motor expo, where it occupies the largest space.
“BYD has rapidly gained popularity in the Thai market, and will attract many consumers in 2024 as well,” said Benson Ke, general manager of BYD Thailand. The automaker plans to start up its first passenger-vehicle plant outside China in Thailand in mid-2024 and build a more localized supply network.
The second-wave EV makers are expected to struggle in other Southeast Asian markets as well, for similar reasons.
“There are few Chinese EVs suited to the needs of local markets outside Thailand in terms of size and price, and the spread of EVs has been slow,” said Hirotaka Uchida, head of consulting firm Arthur D. Little’s Thai arm.
Indonesian consumers want high-capacity SUVs, while Malaysians look for compact cars, for example, and it will be difficult for automakers to gain a foothold without meeting these needs or at least offering something that BYD does not.