Shulou(Shulou.com)11/24 Report--

Chinese electric car maker BYD has done well in Southeast Asia, surpassing competitors such as Tesla to account for more than 1/4 of the local electric vehicle market, according to news on September 20.

In addition to the attractive price, BYD's success in Southeast Asia is also due to its distribution cooperation model with large local conglomerates, executives and analysts say. This model allows BYD to expand its business in the local market, test consumer preferences and deal with complex local regulations.

This model of cooperation is similar to that pursued by Japanese automakers in Southeast Asian countries decades ago. While everything comes at a price, this model helps BYD expand rapidly in the local market, in stark contrast to Tesla's solo fight.

"at the moment, BYD's main focus is on brand expansion rather than optimizing profit margins," said Soumen Mandal Mandal, a senior analyst at Counterpoint Research, the market research firm. "by providing greater profit margins for local dealers, BYD can cultivate trust and loyalty and pave the way for larger business expansion."

BYD didn't respond to a request for comment.

The electric vehicle market in Southeast Asia is small but growing rapidly. According to Counterpoint, BYD's sales share in Southeast Asia exceeded 26% in the second quarter of 2023. Its Atto 3 electric car, which starts at $30,000 in Thailand, is the best-selling electric car in Thailand. By contrast, Tesla's minimum Model 3 starts at $57500 in the Thai market.

Electric vehicles accounted for 6.4 per cent of total passenger car sales in Southeast Asia in the second quarter of this year, up from 3.8 per cent in the previous quarter.

It's not easy. BYD's partners in Southeast Asia include Sime Darby in Malaysia and Singapore, Bakrie & Brothers in Indonesia, Ayala in the Philippines and Rever Automotive in Thailand.

Lin Zhiqiang, managing director of auto sales consulting firm Urban Science in China, said that Chinese brands have little historical record in the Southeast Asian market, and BYD's partnership will help it develop there.

"if buyers are hesitant or worried, partnering with established local companies such as Senami, Ayala or Bakrie & Brothers will reassure them, especially when it comes to after-sales support," says Mr Lin.

BYD is investing nearly $500m in a new plant in Thailand that will produce 150000 electric vehicles a year from 2024, mainly for export to Southeast Asia and Europe.

AC Motors, owned by Ayala in the Philippines, plans to open 12 local BYD outlets in the next 12 months. Antonio Zara, head of AC Motors's car business, said the company's initial spending was focused on brand building to get more consumers to consider buying electric cars.

"this is to break the myth," he stressed. "this is about breaking the price myth and promoting the total cost of ownership."

In Thailand, BYD ads are everywhere, from small screens on elevated trains in the capital Bangkok to large billboards in provincial towns.

Rever, BYD's local partner in Thailand, did not respond to questions about distribution and marketing strategies.

Alex Kim, BYD's chief strategy officer, said that in Indonesia, BYD won a government contract to supply 52 pure electric buses to Jakarta through VKTR, a subsidiary of Bakrie & Brothers. He added that the Indonesian market is full of challenges, and in addition to government procurement, VKTR is also in talks with large local companies in India to sell BYD electric passenger cars.

Thai electric car buyers accounted for 24% of BYD's overseas sales in the second quarter, making Thailand BYD's largest overseas market, according to data challenging Tesla Counterpoint. By comparison, Southeast Asia accounts for less than 1 per cent of Tesla's total electric vehicle sales.

Tesla's website currently lists only two stores in Southeast Asia, both in Singapore. But Tesla is recruiting staff for the Thai and Malaysian markets.

BYD's cooperation strategy in Southeast Asia is in sharp contrast to Tesla. Tesla's direct selling model is difficult to copy, because no other electric car brand is as popular as Tesla, and no one can. In addition, the promotion of Tesla CEO Elon Musk (Elon Musk) on social media should not be ignored.

BYD and its partner Senami are experimenting with a new approach in Singapore to attract technology-savvy young consumers.

The two sides jointly launched five showrooms called "BYD 1826" in Singapore, which are also used as Michelin restaurants, and the dishes are named after the model of BYD electric car.

Jeffrey Gan, managing director of retail and distribution in Southeast Asia, Hong Kong and Macau, said: "with the opening of BYD Hall 1826, we have access to more customers who want to know more about BYD or the BYD brand."

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