Hyundai electric vehicles and Great Wall challenge Japan’s dominance in Southeast Asia
BANGKOK – When Chinese company Great Wall Motor launched the Haval H6 hybrid sport utility vehicle in Thailand last month, the launch slogan – “It’s time for a change” – seemed to throw the gauntlet at Japanese companies who are profiting from it. ‘a virtual monopoly in Southeast Asia.
Great Wall is among Chinese and South Korean automakers who are capitalizing on Thailand and Indonesia’s efforts to push electric vehicles, threatening to leave behind Japanese rivals reluctant to ditch internal combustion engines.
About 90% of vehicles made and sold in Thailand come from Japanese manufacturers, but most run on gasoline. Great Wall is looking to gain a foothold with nine electrified models over the next three years, some of which are fully electric.
The Chinese company has fully launched into the Thai market with the acquisition last year of a factory from General Motors. Great Wall has invested more than $ 700 million to turn the facility into a smart factory with production lines powered by artificial intelligence, which began manufacturing hybrids in June and is expected to begin production of electric models of by 2023.
The upgrade took advantage of a Thai government program offering an eight-year corporate tax exemption for electric vehicle projects. The country aims to make 30% of locally manufactured vehicles electric by 2030.
“We will become a leader in electrified vehicles in Thailand and cooperate to advance the industry,” said Zhang Jiaming, president of Great Wall’s Thailand and Southeast Asia branch.
Thailand, one of Southeast Asia’s largest auto markets, has been relatively slow to switch to electricity.
No major automaker makes electric models locally, and only 1,400 units were sold nationwide last year, about 60 percent of which were imports made by SAIC Motor. The Shanghai-based company plans to produce electric vehicles here through a joint venture with Thai conglomerate Charoen Pokphand Group.
The Japanese contingent’s electric offerings are limited to a few imported models such as Nissan Motor’s Leaf and Toyota Motor’s luxury brand Lexus. While Mitsubishi Motors appears to start making electricity in Thailand in 2023, hybrids are still favored overall, given the country’s low income and lack of charging infrastructure.
“Chinese players are sure to fill the void and gain market share with cheap electrical devices,” said Hajime Yamamoto of the Nomura Research Institute.
Great Wall will initially import its compact electric Ora, which costs less than $ 10,000 in China after subsidies, and is expected to switch to local production of the car after growing demand.
In Indonesia, Southeast Asia’s other major auto market, Hyundai Motor is expected to bring a $ 1.6 billion gasoline-powered car factory outside of Jakarta online this year. The facility will start producing electricity as early as 2022, according to local media.
Hyundai decided to go ahead with the project in November 2019, around the same time Indonesia and South Korea signed an economic partnership agreement. The deal made South Korean auto parts duty-free, allowing South Korean automakers to compete on a par with Japanese cars.
The Indonesian government has set itself the goal in 2019 of making electricity 20% of the country’s automobile production. But Japanese automakers had previously ramped up production there after the government started offering incentives for green vehicles in 2013, and are reluctant to embark on another round of big investments. This gave Hyundai room to get started.
There is frustration in Bangkok and Jakarta over the reluctance of Japanese automakers to take the electric train.
When the Thai government began to weigh a more ambitious target, the automotive division of the Japanese Chamber of Commerce in Bangkok advocated a more cautious and gradual approach.
The group argued that Thailand’s continued dependence on fossil fuels means electric vehicles alone won’t cut emissions much. Indonesia faces a similar problem.
Nonetheless, if Japanese automakers do not follow the investments made by their Chinese and South Korean counterparts, they risk losing out, as Japanese home appliance and cellphone makers did before them.