In a fierce battle for supremacy, Chinese electric vehicle (EV) manufacturers are taking their price war beyond domestic borders. As more than a dozen players seek to bolster sales and offset losses at home, they are now eyeing overseas markets. Southeast Asia, where battery-powered cars are gaining popularity, has become a battleground for Chinese EV builders. Established giants like Build Your Dreams (BYD) and Great Wall Motor, along with start-ups like Hozon New Energy Automobile, are slashing prices to compete with Japanese rivals whose petrol vehicles dominate the market.
The Profit Margin Quest
The motivation behind this overseas expansion lies in the lofty profit margins available outside China. With overcapacity woes plaguing the domestic industry, Chinese automakers are increasingly looking abroad to improve earnings. China, as the world’s largest automotive and EV market, sees nearly four out of every 10 new cars powered by batteries. However, the crowded landscape, with more than 100 companies, has led to intense competition and diminishing profits. The collapse of underperforming players like WM Motor and Human Horizons has further exacerbated the situation.
Southeast Asia: A Lucrative Arena
Chinese EV makers have found success in Southeast Asia, where their low-price strategies have paid off. According to data from Deloitte China, their market share in the region grew from 47% in 2021 to an impressive 74% last year. BYD leads the pack with a 33% share of the EV market in the Association of Southeast Asian Nations (ASEAN) countries. Neta-branded electric cars also contributed significantly, accounting for 14% of the regional total.
Price Cuts and Market Dominance
In Thailand, Shenzhen-headquartered BYD, the world’s top-selling electric car builder, recently slashed prices for the updated versions of its flagship Atto3 sport-utility vehicle (SUV). The price reduction of 18% brought the Atto3’s cost down to 899,900 baht (approximately US$24,542). Not to be outdone, Chinese rivals Changan Automobile and Hozon followed suit. Hozon’s Neta V pure-electric car now boasts a price tag of 549,000 baht, a remarkable 30% cheaper than BYD’s Dolphin electric sedan. Meanwhile, Changan’s Lumin EV is priced at 480,000 baht.
Going Global: Challenges and Opportunities
While expanding sales outside China seems like a profitable move, it also presents challenges. As Chinese carmakers flood overseas markets, price competition becomes inevitable. The delicate balance between capturing market share and maintaining profitability is a tightrope these companies must walk. As Qian Kang, an entrepreneur in East China’s Zhejiang province, aptly puts it, “Increasing sales outside China is a good way of chasing profits because prices in markets like Southeast Asia are much higher than on the mainland.” However, the risk lies in the fierce competition that can ultimately hurt their own interests.