BYD, a leading manufacturer of electric vehicles in China, has been on a blitz in Southeast Asia, outpacing competitors like Tesla to take more than a quarter of the market share for EVs sold there.
According to representatives from three partners and analysts, BYD’s early success is based on a pattern of distribution partnerships with big, regional conglomerates that have helped the carmaker expand its reach, test consumer preferences, and navigate the region’s complicated government regulations in addition to offering competitive prices.
While it has a cost, this collaboration strategy, which was once used by Japanese automakers in various Southeast Asian nations, is assisting BYD in quickly increasing its market share in comparison to Tesla’s independent distribution.
“At present, BYD’s primary focus is on brand proliferation rather than optimising profit margins,” said Soumen Mandal, a senior analyst at Counterpoint Research.
“By providing local dealers with more lucrative profit margins, BYD can cultivate trust and loyalty, paving the way for broader expansion.”
Inquiries from Reuters received no response from BYD.
In the modest but rapidly expanding EV market in Southeast Asia, the Chinese manufacturer sold more than 26 percent of all vehicles in the second quarter of 2023. According to Counterpoint, the Atto 3 model, which starts at US$30,000 (RM140,820) in Thailand, was the most popular in the region. In Thailand, Tesla lists the most affordable Model 3 for roughly US$57,500.
After the European Commission last week started a probe into Beijing’s EV subsidies, Southeast Asia, where EV sales accounted for 6.4% of all passenger car sales in the second quarter, may become more significant for Chinese automaker.
“Not a simple market”
Regional distributors for BYD include subsidiaries of Sime Darby in Malaysia and Singapore, Bakrie & Brothers in Indonesia, Ayala Corp. in the Philippines, and Rever Automotive in Thailand.
According to Chee-Kiang Lim, general director for China at auto sales consultancy Urban Science, BYD’s collaborations are assisting it in a market where Chinese automakers do not yet have a proven track record.
“If buyers are unsure or have any concerns, partnering with established players like Sime Darby, Bakrie & Brothers, or Ayala Corp will give them the peace of mind, especially for aftersales support,” he said.
The Shenzhen-based manufacturer will spend close to $500 million building a new facility in Thailand that will start producing 150,000 electric vehicles annually starting in 2024 for export to Southeast Asian and European markets.
The chairman of its automotive division, Antonio Zara, stated that the priority for early expenditure is on brand promotion and getting more people interested in EVs. Ayala Corp’s AC Motors expects to construct a dozen BYD outlets in the Philippines within the next 12 months.
“It’s about busting the myths on range,” he said. “It’s about busting the myth on price and communicating the total cost of ownership.”
From tiny displays inside elevated trains in the Thai city of Bangkok to enormous billboards in rural communities, advertising is everywhere.
When questioned about its marketing and distribution plans, BYD’s Thai partner Rever remained silent.
According to BYD’s chief strategy officer Alex Kim, the company was able to rely on Bakrie & Brothers’ subsidiary VKTR in Indonesia to win a government contract for 52 electric buses for Jakarta.
In addition to government purchases, Kim said that VKTR was in discussions to sell BYD EV buses with sizable domestic companies. “Indonesia is not an easy market to do business on your own,” Kim remarked.
Contesting Tesla
According to Counterpoint, Thai EV consumers made up 24 percent of BYD’s international sales in the second quarter, making Thailand the Chinese automaker’s largest foreign market. By contrast, less than 1 percent of Tesla’s sales are made in this region.
Although it is hiring for Thailand and Malaysia, Tesla’s website now only mentions two locations in the region, both in the affluent city-state of Singapore.
In contrast to Tesla, whose direct-to-consumer strategy is challenging to imitate because no other new EV company enjoys the same level of enthusiasm or Elon Musk’s disproportionate media presence, BYD’s Southeast Asia strategy and its embracing of dealerships.
To attract young, tech-savvy customers to the Chinese brand in Singapore, BYD and its partner Sime Darby Motors are testing a novel strategy.
Five “BYD by 1826” showrooms have been opened by the partnership, which also functions as a fine dining establishment with meals named by BYD EV models.
“With BYD by 1826, we are able to reach out to more customers who want to know more about BYD or [are] new to the BYD brand,” said Jeffrey Gan, the managing director of retail and distribution for Sime Darby Motors in Southeast Asia, Hong Kong and Macau.