Bloomberg published an article on Sunday saying that Chinese electric vehicle manufacturers such as BYD are entering the Southeast Asian market, and opportunities and challenges coexist. The potential user group here is huge, making it an ideal target market for Chinese car companies. However, price is still a barrier for ordinary consumers to buy electric vehicles. Moreover, markets such as Vietnam prefer local brands.
opportunity
In July last year, BYD officially entered the Vietnamese market. The country's young consumers are keen on buying electric cars and hybrids.
Moreover, in Southeast Asia, hundreds of millions of affluent consumers are seeking a better lifestyle, making the region an ideal location for Chinese car companies. In the European and American markets, tariffs have put Chinese car companies at a competitive disadvantage.
Most consumers in Southeast Asia are at least receptive to foreign brands, and Japanese automakers like Toyota Motor have always been very popular in Southeast Asia. Although their dominance has declined, Japanese automakers such as Nissan and Honda still account for about 68% of passenger car sales in Southeast Asia in 2023.
According to forecasts by Roland Berger Consulting, Chinese automakers' market share in Southeast Asia is expected to increase from 6% in 2023 to about 13% by 2030.
Nearly 70% of respondents to a KPMG survey last July of about 1,100 residents from wealthier cities in Vietnam expressed interest in switching to electric or hybrid vehicles, providing an opportunity for BYD and other Chinese automakers to consolidate market share.
challenge
But while Southeast Asia's growing middle class aspires to own electric vehicles, these still expensive vehicles are beyond the reach of many. Moreover, the power supply here is unreliable. Electric vehicle charging infrastructure remains incomplete in many countries. In countries such as Vietnam, consumers tend to choose brands with which they are more familiar.
Zheng Yun, a partner at Roland Berger Consulting, said that the number of cars on the roads in Southeast Asia is about 5 million, while the number of motorcycles is about 250 million. The market complexity far exceeds that of China. To break into this market, Chinese car companies need to deal with different cultures, languages and regulatory systems.
"There is no doubt that smart electric vehicles will eventually replace traditional internal combustion engine vehicles." Zheng Yun said. But he also pointed out that under the government's promotion and incentive policies, it took about five years for consumers in the Chinese market to actively choose to buy electric vehicles. This time can be used as a reference for the popularity of electric vehicles in the Southeast Asian market.
A school teacher named Hairayani in Jakarta said that maybe rich people know more about electric cars, but ordinary people may not understand them. There are also price issues and the extra trouble of finding charging stations. He has no plans to replace his gas-powered vehicle in the near future.
Chinese manufacturers face greater challenges in countries with strong local EV brands, such as Vietnam. With an expanding network of proprietary charging stations and entry-level mini electric cars priced at about $11,700, VinFast, the “Tesla of Vietnam,” has easily outsold its Chinese rivals.
In 2023, a total of nearly 91,500 electric vehicles were sold in Vietnam, of which more than 87,000 were VinFast models. However, many of these sales came from VinFast related parties, especially Green and Smart Mobility JSC, the country’s largest taxi company, which is 95% owned by VinFast founder Pham Nhat Vuong.
Raise consumer awareness
Until consumer concerns subside and EV adoption accelerates, Chinese companies are doing their best to raise awareness about electric vehicles.
GAC Aion, a subsidiary of Guangzhou Automobile Group, has booked advertising space on a giant billboard at Thailand's Suvarnabhumi Airport to promote its cars directly to travelers heading to Bangkok. BYD recently opened a showroom the size of a football field in central Jakarta.
Chinese automakers are also building production facilities in the region, such as BYD's $1.3 billion plant on the Indonesian island of Java that is expected to begin operations in January next year. At the same time, Chery Automobile plans to build an electric vehicle factory in Rayong, Thailand, which is expected to be put into production this year with an annual output of 50,000 vehicles.