China’s electric vehicle (EV) manufacturer BYD has gained a remarkable market share in Southeast Asia, surpassing rivals like Tesla. BYD’s strategic approach of forming distribution partnerships with major local conglomerates has allowed the company to extend its reach, understand consumer preferences, and navigate complex regional regulations.
Unlike Tesla’s direct-to-consumer distribution approach, BYD’s partnership model closely resembles strategies employed by Japanese automakers in Southeast Asia decades ago. This approach has accelerated BYD’s market share growth, albeit at a cost. BYD focuses on expanding its brand presence rather than maximizing profit margins, offering local dealers more attractive profit margins to build trust and loyalty, facilitating broader expansion.
In the second quarter of 2023, BYD accounted for over 26% of all EV sales in Southeast Asia. Its Atto 3 model, priced at $30,000 in Thailand, emerged as a regional bestseller, contrasting with Tesla’s starting price of around $57,500 for the basic Model 3 in Thailand. This demonstrates the growing significance of the Southeast Asian market for Chinese automakers, with EVs representing 6.4% of all passenger vehicle sales in the region during the same quarter.
BYD’s success in Southeast Asia is largely attributed to its key regional distributors, including divisions of companies like Sime Darby, Bakrie & Brothers, Ayala Corp, and Rever Automotive. These partnerships have played a critical role in building trust, especially in a region where Chinese car brands lack an established track record.
To further expand its presence in Southeast Asia, BYD is heavily investing in Thailand, planning to construct a new factory that will produce 150,000 EVs annually from 2024 for export to Southeast Asia and European markets. Partnerships with Ayala Corp’s AC Motors in the Philippines and Rever in Thailand are also focused on brand building and dispelling myths surrounding EVs, such as range and price concerns.
BYD’s strategy has positioned it as a strong competitor against Tesla in Southeast Asia. Thai EV buyers accounted for a significant portion of BYD’s overseas sales in the second quarter, making Thailand its largest foreign market. In contrast, Tesla’s presence in the region is currently limited, with only two stores in Singapore, although it is expanding into Thailand and Malaysia.
BYD’s success in Southeast Asia emphasizes the importance of adapting to local market dynamics and establishing strong partnerships to thrive in the rapidly growing EV sector.
– Counterpoint Research