A visitor testing GAC Aion’s Hyper HT electric vehicle at the Aion factory in Rayong, Thailand. China’s EV companies are making inroads in Thailand, a key industry hub, as Europe and the United States wield tariffs to keep them out. — ©2024 The New York Times Company
MA Haiyang and eight of his colleagues arrived in Thailand a year ago to establish the first overseas operation for GAC Aion, an electric vehicle (EV) maker from China. They had no office, no factory, no local employees and, basically, no clue.
The team set up shop in a Bangkok hotel, commandeering conference rooms and holding meetings in the lobby. They had a long list of tasks: find office space, recruit dealers and devise a business strategy. The team worked round the clock and, 74 days after arriving in Thailand, sold its first EV.“The window of opportunity for Chinese new energy vehicles going overseas will be relatively short,” said Ma, general manager at Aion for South-East Asia, using China’s preferred phrase for fully electric and gas-electric hybrid vehicles. “This is why we wanted to hurry up.”
Chinese EV manufacturers such as Aion are stampeding into overseas markets. Thailand is one of the first countries to experience the sudden influx of China’s automobile brands, and is confronting how their ambition and competitiveness are reshaping its car industry.
The arrival of China EV Inc is evident everywhere in Thailand. Billboards are blanketed with advertisements for Chinese cars. Land prices are soaring as so many Chinese firms are building car factories.The fast changes in the Thai auto market also show how Chinese companies are leaping ahead of their global rivals in Japan, which has shunned EVs, and the US, where Tesla dominates the sector.
Last year, sales of popular Japanese brands such as Nissan, Mazda and Mitsubishi plummeted as consumers bought new electric cars from Chinese manufacturers instead.
Dealers that had worked with Japanese and American automakers for decades were now turning over showrooms to make way for Chinese vehicles.
Amid an increasingly crowded field, Chinese brands are slashing prices on EVs. The overseas push is the next phase in Beijing’s long-term strategy to focus on new EVs and upend the balance of power in the automobile industry.
After years of government support for the sector, Chinese manufacturers are adept at mass-producing EVs. They have created dependable supply chains, while working out the kinks to reduce prices.
That international push has been met with tariffs in two major auto markets to prevent Chinese vehicles from crushing homegrown competitors. Last month, the European Union said it would impose tariffs of up to 38% on EVs imported from China into the bloc. A month earlier, the US quadrupled tariffs on EVs built in China.Thailand is small by comparison, but it is the biggest market in South-East Asia.Known as the “Detroit of Asia”, it serves as a regional manufacturing hub. Its proximity and strong trade ties to China also allow Chinese cars to be imported quickly and inexpensively.
“It’s a beachhead market,” said Tu Le, a managing director of the consultancy Sino Auto Insights. “It suits a lot of Chinese brands because of the lower price point.”
Japanese automobile brands accounted for 86% of new car sales in 2022. That figure dropped to 75% last year, with China’s BYD, Great Wall Motor and SAIC Motor grabbing significant market share.
In 2021, Thailand said it wanted EVs to make up 30% of its automobile production by the end of the decade, an ambitious goal that seems unattainable without Chinese companies. Its government also put in place subsidies and tax breaks to spur demand.A weak Thai economy has contributed to a significant decline in overall car sales this year. EV sales have slowed a lot but are still up 50% over last year.
Chinese automakers have responded by cutting prices, leaving some competitors worried about a race to the bottom.
Chong Baoyu, general manager of Great Wall Motor in the Thailand unit, said an all-out price war would “kill the industry” as customers would hold off on buying a vehicle, expecting prices to fall further.
Four years ago, Great Wall Motor acquired General Motors’ factories as part of the US carmaker’s retreat. In May, with EU tariffs on China looming, Great Wall Motor said it would close its regional headquarters in Munich, citing an “increasingly challenging European electric vehicle market”.The company plans to continue operating in Europe, Chong said, but the prospect of tariffs makes Thailand an even more important market for Chinese brands.Six Chinese EV companies are already selling cars in Thailand, and three more entrants are coming this year. BYD, Aion, Great Wall, Hozon Auto’s Neta and Chery are among those that have opened or are building factories in Thailand.
V Group Cars, a dealer network with 44 showrooms, said most of its locations sold only Chinese brands. It stopped working with Suzuki and converted Mazda, Mitsubishi and Ford Motor showrooms into sales locations for Aion, Neta, Chery’s Omoda and Jaecoo brands, and Zeekr.
Aion, in its first year in Thailand, has opened 41 showrooms and started production at a new factory. It plans to open a plant in Indonesia and start selling its cars in nine countries across South-East Asia.
Aion has also adapted its cars for the local market, turning up the power of the air-conditioning and strengthening the chassis for poor road conditions.
On his desk at Aion’s offices in a Bangkok high-rise, Ma displayed a miniature model ship that captures the spirit of Chinese automakers prospecting for customers.Written on the ship’s sails is a Chinese phrase: “Ride the wind, cleave the waves and return with a full load.” — ©2024 The New York Times Company
