BYD, China’s leading electric vehicle (EV) manufacturer, has gained significant traction in the Southeast Asian market, surpassing competitors like Tesla to capture over a quarter of the EV market share in the region. This success can be attributed to BYD’s strategy of forming distribution partnerships with large local conglomerates, enabling the carmaker to establish a strong presence, understand consumer preferences, and navigate complex government regulations. This partnership model, reminiscent of the approach used by Japanese automakers in Southeast Asia decades ago, has allowed BYD to rapidly build market share.
Unlike Tesla’s go-it-alone distribution strategy, BYD’s focus is primarily on brand proliferation rather than optimizing profit margins. By providing attractive profit margins to local dealers, BYD cultivates trust and loyalty, paving the way for broader expansion. As a result, the Chinese automaker sold more than 26% of all cars in Southeast Asia’s EV market during the second quarter of 2023. Its affordable Atto 3 model, priced at $30,000 in Thailand, emerged as the bestseller in the region.
EVs accounted for 6.4% of all passenger vehicle sales in Southeast Asia during the second quarter, indicating the region’s potential for Chinese automakers. However, Chinese brands lack an established track record in Southeast Asia, making partnerships with established players crucial. BYD’s regional distributors include divisions of Sime Darby in Malaysia and Singapore, Bakrie & Brothers in Indonesia, Ayala Corp in the Philippines, and Rever Automotive in Thailand.
Ayala Corp’s AC Motors, which plans to open multiple BYD dealerships in the Philippines in the coming year, aims to focus on brand building and educating consumers about the benefits of EVs. In Thailand, BYD has invested heavily in advertising campaigns to increase brand awareness. Additionally, BYD is investing nearly $500 million in Thailand to build a new factory that will produce 150,000 EVs per year for exports to Southeast Asia and European markets.
While BYD has successfully gained market share in Southeast Asia, Tesla lags behind with less than 1% of its sales in the region. BYD’s partnership approach, combined with its affordable pricing and focus on addressing consumer concerns, has proven effective. Tesla’s direct-to-consumer approach, highlighted by its limited presence in the region, has been difficult to replicate. Nonetheless, Tesla plans to expand its presence by opening stores in Thailand and Malaysia.
The influx of Chinese automakers in Southeast Asia is expected to gain momentum, especially after the European Commission announced an investigation into Beijing’s EV subsidies. As competition intensifies, the distribution partnerships pursued by BYD could serve as a model for other automakers seeking to establish themselves in the region.
Sources:
– “China’s BYD Makes Big Southeast Asia EV Move with Autos Conglomerates” – Reuters
– “2023 Tata Nexon EV long range detailed review: Raises the bar, feels futuristic” – TOI Auto