Chinese EV giant BYD expands Southeast Asian market share through strategic partnerships

BYD's EV market share: China's electric vehicle manufacturer BYD has captured more than a quarter of the EV market share in the Southeast Asian region, surpassing rivals like Tesla, driven by a strategic approach of forming distribution partnerships with major local conglomerates, enabling BYD to extend its reach, understand consumer preferences, and navigate complex regional regulations.

Partnership model

BYD's partnership model, reminiscent of strategies employed by Japanese automakers in Southeast Asia decades ago, has accelerated its market share growth, setting it apart from Tesla's direct-to-consumer distribution approach, albeit at a cost. Soumen Mandal, a senior analyst at Counterpoint Research, noted that BYD focuses on expanding its brand presence rather than maximising profit margins. By offering local dealers more attractive profit margins, BYD is building trust and loyalty, which facilitates broader expansion.

In the second quarter of 2023, BYD accounted for more than 26 per cent of all EV sales in Southeast Asia. Its Atto 3 model, starting at $30,000 in Thailand, emerged as a regional bestseller, contrasting with Tesla's starting price of approximately $57,500 for the basic Model 3 in Thailand. EVs represented 6.4 per cent of all passenger vehicle sales in Southeast Asia during the same quarter, indicating the region's growing significance for Chinese automakers.

BYD's key regional distributors include divisions of companies like Sime Darby, Bakrie & Brothers, Ayala Corp, and Rever Automotive. These partnerships are instrumental in building trust, particularly in a region where Chinese car brands lack an established track record.

BYD's investments 

BYD is heavily investing in Thailand, with plans to construct a new factory that will produce 1,50,000 EVs annually from 2024 for export to Southeast Asia and European markets.

Partners like Ayala Corp's AC Motors in the Philippines and Rever in Thailand are focusing on brand building and dispelling myths surrounding EVs, including range and price concerns.

In Indonesia, BYD has leveraged Bakrie & Brothers' unit VKTR to secure a government contract for 52 EV buses for Jakarta. This illustrates the importance of local partnerships in navigating the challenging Indonesian market.

BYD's strategy has positioned it as a strong competitor against Tesla in Southeast Asia, with Thai EV buyers accounting for a significant portion of its overseas sales in the second quarter, making Thailand its largest foreign market.

BYD's approach in Southeast Asia emphasises collaboration with local partners, building dealer networks, and utilising innovative marketing strategies, in contrast to Tesla's direct-to-consumer model. Tesla's presence in the region is currently limited, with only two stores in Singapore, although it is expanding into Thailand and Malaysia.

In Singapore, BYD has partnered with Sime Darby Motors to launch "BYD by 1826" showrooms that also serve as upscale restaurants, introducing potential customers to the BYD brand innovatively.

BYD's success in Southeast Asia showcases the importance of adapting to local market dynamics and establishing strong partnerships to thrive in the rapidly growing EV sector.

(With Reuters Inputs)