‘Asia’s Detroit’ Wants an EV Makeover. Enter: Chinese Carmakers. | Mint

‘Asia’s Detroit’ Wants an EV Makeover. Enter: Chinese Carmakers.

‘Asia’s Detroit’ Wants an EV Makeover. Enter: Chinese Carmakers.
‘Asia’s Detroit’ Wants an EV Makeover. Enter: Chinese Carmakers.

Summary

China’s assertive entry into Thailand shows its ambition to dominate the global EV market and edge out traditional giants like Japan.

RAYONG, Thailand—Ever since Nissan Motors started building cars in Thailand in the early 1960s, Japanese companies have been a driving force in the country’s rise as an auto manufacturing powerhouse. Now, Chinese competitors are moving in to bring it into the electric age.

On the outskirts of Thailand’s carmaking capital, Rayong, not far from the industrial zones home to Japanese auto plants, China’s largest electric-vehicle maker, BYD, is developing what industry experts believe will be Thailand’s biggest car plant. Half a dozen other Chinese companies already build EVs here or have committed to, with an eye on domestic demand and the country’s status as an export hub thanks to regional free-trade pacts.

China’s assertive entry into Thailand shows its ambition to dominate the global EV market and edge out traditional giants like Japan. As their offerings become more widely available in many parts of the world, major Chinese carmakers are seeking to set up production lines outside China to expand their reach, boost sales and take advantage of incentives being rolled out in various capitals.

That is a challenge for Japan, a juggernaut of the conventional car industry. Chinese rivals are entering the race as relative upstarts, willing to throw their weight behind new products. Japanese carmakers, by contrast, are largely attempting a slower transition that will both protect their existing revenue streams while allowing room for change.

Chinese companies “have the tech, the design and the ambition," said Narit Therdsteerasukdi, secretary-general of Thailand’s Board of Investment, who helped draft a new policy to boost EV production and uptake. He said there is “room for everyone to benefit" from the policy, but Chinese companies have moved first.

Chinese automakers already rule their home market, eclipsing internationally recognizable brands such as Volkswagen and Toyota. Car exports from China have risen sharply, overtaking South Korea and Germany in recent years and surpassing the world’s top auto exporter, Japan, in the first three quarters of 2023.

Forays into Thailand by Great Wall Motor, best known in China for its off-road SUVs, and BYD are among their first EV passenger-car investments outside their home country.

One attraction is that car exports from Thailand to many nearby markets in Southeast Asia face no tariffs. Chinese carmakers also have the advantage of piggybacking on Japan’s decadeslong effort to build the country’s auto sector from the ground up.

Thailand, often called “Asia’s Detroit," has a highly skilled workforce and a wealth of experience in the international car market that most of its neighbors lack.

While most Chinese carmakers tend to rely on their own supply chains—importing parts from China or bringing their suppliers with them—Thai officials say some 2,000 domestic suppliers of spare parts and components stand ready to assist the transition.

Japanese and other companies are also starting to pivot. Honda Motor plans to begin producing electric cars in Thailand this year. Toyota will launch its first electric pickup truck in a small pilot project in the country next year.

“In line with the global direction of Toyota, we will develop and bring a full line up of electrified vehicles to our Asian market," a spokeswoman said.

Highways leading in and out of Bangkok are flanked with billboards advertising Chinese electric cars—though most of the vehicles whizzing past them are still Japanese. EV adoption is still low across most of Southeast Asia, but the Chinese are betting that will change.

In Thailand, more than 50,000 new EVs were registered during the first nine months of the year. That is seven times the number of EVs registered during the same period last year, and accounts for 15% of all new registered cars.

From January 2024, the Thai government is offering subsidies worth up to thousands of dollars a vehicle to EV importers and manufacturers, which in turn brings down prices for consumers. It has slashed excise tax that importers and manufacturers must pay and cut down import duties by up to 40% for fully built vehicles through the next two years.

It has set a goal called “30@30," aiming to make zero-emission vehicles account for at least 30% of all domestically produced units by 2030.

Great Wall Motor acquired a car-making plant from General Motors in 2020, inheriting its entire workforce, said Amnat Saengjan, vice president of manufacturing for Great Wall Motor Thailand. It retooled the factory to make hybrid cars and is setting up component-production lines next door to make wire harnesses, powertrains and EV batteries.

Since 2020, it has produced some 20,000 traditional hybrid and plug-in hybrid SUVs from the Rayong plant, which has yet to hit its maximum capacity of 80,000 cars a year. As the company enters other Southeast Asian markets including the Philippines and Malaysia, many Thai-made cars will be exported to the region.

The company will add Ora Good Cat, a battery-powered look-alike of the Mini Cooper, to its manufacturing lineup next year and plans to invest $640 million in Thailand by 2025.

BYD’s new factory, currently a muddy construction site surrounded by cassava plantations on the outskirts of Rayong province, is expected to complete construction by mid-next year, according to a person familiar with the plans. The company—which is challenging Tesla as the world’s top EV seller—will start pumping out up to 150,000 battery-powered cars sometime next year from its Thailand factory, it has previously said.

Japanese carmakers started working in Thailand after World War II, when Nissan joined with the newly established Siam Motors to import new and used vehicles. Demand for pickup trucks was especially high among the country’s rural population during this period of postwar economic recovery.

By 1962, Siam and Nissan established Thailand’s first Japanese auto-assembly plant in Bangkok, employing 120 people and producing just four cars a day. By the early 2000s, Thailand had become one of the world’s biggest auto exporters, helping to lift millions of people out of poverty.

Nattapol Rangsitpol, the senior bureaucrat in Thailand’s Ministry of Industry, likened the current moment to the switch from boxy television sets to flat-screen technology in the late 1990s. It was a difficult transition because people had already invested in the cathode-ray tube technology that had been the industry standard for decades.

Nattapol said that while Thailand welcomed the EV transition, it didn’t want to alienate existing players. “We want to keep a balance," he said.

Write to Feliz Solomon at feliz.solomon@wsj.com and Selina Cheng at selina.cheng@wsj.com

‘Asia’s Detroit’ Wants an EV Makeover. Enter: Chinese Carmakers.
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‘Asia’s Detroit’ Wants an EV Makeover. Enter: Chinese Carmakers.
‘Asia’s Detroit’ Wants an EV Makeover. Enter: Chinese Carmakers.
View Full Image
‘Asia’s Detroit’ Wants an EV Makeover. Enter: Chinese Carmakers.
‘Asia’s Detroit’ Wants an EV Makeover. Enter: Chinese Carmakers.
View Full Image
‘Asia’s Detroit’ Wants an EV Makeover. Enter: Chinese Carmakers.
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