4 Jan 23

Outlook: Chinese expansion in the Southeast Asian EV market

The new year in the global electric (EV) market is critical as the rivalry between countries will be reinforced with lessons learned from the stormy events of 2022. Amid all the strategies being drawn for the top regions in the EV market, China has already started taking small steps in a region which appears to be too perfect for expanding in a challenging year like 2023: ASEAN. 

Let's first look at the statistics: Revenue in the EV market is expected to reach around $198 bn this year, while most of the international revenue will go to China, Statista says. Being the world's largest EV market and expanding in Europe without losing pace in the last few years, China also has several advantages to penetrate the Southeast Asian market: 

  • China has several EV makers who have the experience and the resources to enter an isolated market, 
  • The highly premature countries in ASEAN are perfect targets with low entry barriers and competition,
  • China has strong supply chains in the region and enjoying increasing collaboration,
  • Most importantly, the price range of Chinese EVs is what the ASEAN customers are looking for.

Tides are changing

For the big countries in Southeast Asia, such as Indonesia and Thailand, the Japanese OEMs have been the right call for a long time, thanks to the affordability of these vehicles. According to Bloomberg, 78% of all the passenger cars and SUVs sold in Indonesia, the region's biggest market, were below the $20,000 price tag in 2019. With the electrification push along with the drastic economic measures to face the economic recession, this picture may dramatically change over a few years. 

The reason is simple: While Toyota's Avanza SUV is sold at a maximum price tag of around $19,000 in Indonesia, the first EV introduced in the country, the bZ4X, reaches a price tag of $75,600. Hyundai's IONIQ 5, the first EV to be manufactured in the ASEAN region, is doing the same, with a price of around $48,000. 

Chinese EV makers have started to replace the high-budget Japanese and Korean models, and it is only a matter of time for them to convince the ASEAN customers with their prices fully. 

The crossroads: Thailand 

With a population of over 675 million, the ASEAN market is a vast yet-to-be-discovered region for many EV makers. Mordor Intelligence says the EV market in the area will reach a volume of $2.6 bn by 2027, while Bloomberg estimates the passenger car sales to reach 5 million by 2040. The shift in prices will highly favour the Chinese EV makers, according to the figures of Jato Dynamics: Between 2011 and 2021, the prices of EVs in Europe jumped 28%, while Chinese EV prices dropped 47%.

As a result, Chinese EVs have started a slow but steady push in the ASEAN region, mainly targeting Thailand. BYD, which ousted Tesla as the biggest global EV maker in 2022 Q2, launched Atto 3 in October 2022 in Thailand, with a price tag of around $30,000 and a range exceeding 400 km. BYD accelerated its penetration in the Thai market by partnering with Rever Automotive. 

Great Wall entered Thailand in 2020 after acquiring the auto assembly plant in Rayong Province from General Motors (GM) and began production the following year. The EV maker defined Thailand as the "regional hub for its business in the ASEAN." In 2022, Great Wall sold over 8,000 EVs in Thailand between January and September 2022, reaching the highest sales volume among EV makers. The company aims to upgrade the Rayong plant to a capacity of 80,000 vehicles per year. In Malaysia, Great Wall is planning to introduce nine models in the coming three years. 

Aiways, another Chinese EV maker, received an order of 150,000 EVs from Phoenix EV, an e-mobility provider in Thailand, for the next five years. Established in 2017 with an annual capacity of 150,000 vehicles, according to Cnevpost, Aiways' strategy is heading overseas. Aiways is also active in Singapore and Laos and sees the Southeast Asian market as an excellent opportunity to grow.  

Hozon, a new EV startup with growing sales and supplying batteries from the global leader CATL, has secured orders for over 5,000 deliveries to Laos, Nepal and Myanmar. The main target, however, is Thailand. Neta V of Hozon hit the Thai market in August 2022, followed by a critical deal struck with the countries' energy giant PTT.

Electric four-wheeler boom

According to McKinsey, EV adoption in China will reach 60%, and the country will dominate over 40% of EV sales globally by 2030. The electric-four wheeler (E4W) production will boom in Southeast Asia, says McKinsey, with Indonesia, Thailand and Malaysia being the leaders.

The ongoing investments and collaborations are pointing to the Chinese presence in the boom expected: 

  • Malaysian Fieldman EV has formed a joint venture with Chinese state-owned Changan Automobile to build a plant in Malacca.
  • Geely acquired Malaysian Proton Cars to make the EV maker number one in the country.
  • SAIC launched its first EV in Indonesia, Wuling Air EV, last summer, while the country has recently partnered with CATL to launch a $2 billion EV fund.
  • Geely has increased its sales points in Indonesia by around 40 as of the end of 2022, defying major Japanese and Korean brands.
  • The e-scooter leader of China, Niu Technologies, is busy expanding operations in Indonesia, Vietnam and other Southeast Asia countries. 

The surge in EV investments from the Chinese EV makers signals a substantial shift in global EV manufacturing for the future, as the US and Europe plan to counter this expectation. 

The main photo shows the ORA Good Cat EV at the Moto Expo Thailand 23, courtesy of Shutterstock.

Authored by: Mufit Yilmaz Gokmen