Chinese firms eye more overseas markets

A cargo of 3,600 new energy vehicles recently transported to Southeast Asia from Nansha Port in Guangzhou, Guangdong province, marked the largest single shipment to date by a Chinese NEV startup.

The electric Neta V models, made by Hozon, left China in late March, destined for Thailand and neighboring countries aboard a ship operated by NYK Line.

Before this shipment, Hozon, which is based in Shanghai, had sold more than 3,000 electric vehicles in Thailand since it started trading in the nation in August.

The startup's Neta V ranked second on a list of popular electric vehicles, or EVs, in the Thai market in the first quarter of this year, with 2,502 vehicles delivered, local media outlet AutoLife reported.

The best-selling model was Chinese manufacturer BYD's Atto 3. In total, 5,542 of these vehicles were delivered to Thai owners during the same period.

Six of the top 10 EV models on the list are from Chinese brands. In addition to the Hozon and BYD vehicles, the list includes the Ora Good Cat from Great Wall Motors and the MG4 Electric, MG EP, and MG ZS EV from SAIC.

Combined, the Chinese vehicles accounted for nearly 78 percent of the Thai EV market in the first quarter, with the rest of the market shared by models from Tesla and Volvo.

In addition to Thailand, Chinese NEVs are attracting attention and orders in other overseas markets, including European countries, Israel, Australia and Japan.

The China Association of Automobile Manufacturers, or CAAM, reported that a total of 248,000 EVs and plug-in hybrids were shipped overseas from China in the first quarter, a year-on-year rise of 110 percent.

The popularity of vehicles made in China, especially NEVs, started to rise in 2021, with exports reaching 2 million, taking industry insiders by surprise.

For nearly all of the preceding decade, the figure stood at about 1 million vehicles, even though China became the world's largest vehicle market in 2009.

Last year, such exports reached a new high of 3.11 million, a 54.4 percent year-on-year rise, with China overtaking Germany as the world's No 2 vehicle exporter.

Overseas demand for NEVs is rising fast, and 679,000 were shipped from China last year, a rise of 120 percent from 2021.

However, this soaring demand has been accompanied by rising shipping costs.

Data from marine analysis agency Clarkson Research show that in mid-2020, it cost $10,000 per day to hire a ship with a capacity of 6,500 vehicles, but in December, the price rocketed to $110,000 a day.

Some carmakers complain that despite these fees they have to wait a long time to ship vehicles.

SAIC, China's largest vehicle maker, does not have this problem. It has its own logistics company, Anji, which helped ship more than 600,000 of the company's models to global destinations last year, or about 60 percent of its total exports for the year.

Mexican voyage

On March 16, the Phoenix, a cargo vessel owned by Anji, left Ningde, Fujian province, for Lazaro Cardenas, a port city in Mexico, carrying 1,000 MG vehicles. The 13,500-kilometer voyage was completed in about 23 days.

The new route reduces the journey time by three to five days, compared with the previous method of transporting the vehicles from SAIC's plant in Ningde to Shanghai, before they were shipped.

In 2020, Anji opened a route to Europe, which is fast becoming a major destination for SAIC. Last year, the carmaker delivered more than 100,000 vehicles to that continent.

Zhao Aimin, SAIC International's executive vice-president, said in March that European deliveries that month for the company's hatchback MG4 Electric could reach 10,000.

"We now have about 40,000 orders in Europe awaiting delivery," Zhao said.

Chen Shihua, deputy secretary-general of CAAM, said vehicles manufactured in China have shaken off stereotypical perceptions thanks to improved quality, stylish design and a competitive edge in electrification and onboard features.

"Export destinations tell a story. Our NEVs are selling well in destinations where we failed to gain a foothold previously, such as Europe," Chen said.

Stefan Mecha, head of sales at Volkswagen Group China, said the nation is "without a doubt" leading the way with NEVs, adding that he has not seen a country develop as quickly as China.

"The pace of innovation in China is simply astonishing. E-mobility is now a day-to-day commodity, as the sector is thoroughly industrialized," he said.

"China is also full of tech-savvy consumers. They demand products with advanced connectivity, social networking and entertainment capabilities."

Nio, a startup listed in New York, entered Europe in 2021, starting out in Norway. Last year, it expanded into four other European countries, including Germany and Sweden.

Within a month of setting up in Germany, the company's ET7 electric sedan became the first Chinese model to win the much-coveted Golden Steering Wheel award in the country where modern vehicles were invented.

Defeating rivals such as the Mercedes-Benz EQE and the Citroen C5 X, the ET7 was named best model in the Medium and Upper Class category.

The Golden Steering Wheel is one of the most prestigious and oldest awards in the automotive industry. It has been won by the best new car models in Germany since 1976, and usually the awards go to European and Japanese models.

Since reaching the global market last year, BYD's Atto 3 has added another two successes to its long list of awards.

Last month, the model was named Best EV SUV at the Car of the Year 2023 awards ceremony in Thailand. The same month, it was named Best Electric Vehicle Under $70,000 at the 2023 Drive Car of the Year awards in Australia.

Late last year, SIXT, a rental car company in Germany, ordered thousands of Atto 3s as part of a six-year deal that involves buying about 100,000 vehicles from BYD.

Zhao, from SAIC International, said one of the keys to its success in overseas markets is to offer competitive products based on an understanding of local customers' demands.

"Every week, I have a four-hour meeting with our research and development colleagues," said Zhao, who provides feedback acquired from direct exchanges with overseas car buyers and potential customers.

Top ratings

SAIC's popular MG Electric hatchback, launched last year, is the first model developed by the company aimed at global markets.

The result of efforts by SAIC's Chinese and British teams, the model has won top ratings in new car quality programs in different regions, including the strict European New Car Assessment Program.

Overseas sales of the model are expected to reach 150,000 this year, a result Zhao said is "motivating and assuring".

He said the model's research and development, or R&D, costs of about 1 billion yuan ($145.6 million) are likely to be recovered in about 30 months, half the comparable time for most models.

A second global model will follow later this year, and three to four others will be developed for markets worldwide by late 2024 or early 2025, Zhao added.

As well as products, a sustainable sales network is crucial, Zhao said, adding, "Without our local dealers, we can't reach our customers, no matter how good our products are.

"We give top priority to the comments we receive from our sales teams. We listen to them and discuss ways to ensure our network is working well."

SAIC has been China's largest vehicle exporter for seven consecutive years. Last year, it exported 1.02 million, almost one-third of the nation's total vehicle exports.

Zhao expects the figure to grow to 1.2 million this year, with Europe, the Middle East and Mexico among the company's main markets.

By 2025, SAIC aims to sell at least 240,000 NEVs annually in Europe as part of its goal to deliver 1.5 million vehicles to overseas markets that year.

Patrick Yang, general manager of BAIC International Development Co, said the rising popularity of made-in-China vehicles is linked to Chinese carmakers' repositioning their models.

"Chinese vehicles used to be seen merely as modes of transport, so local customers wanted to buy them as cheaply as possible. But we are now moving upward with our competitive new generation products," he said.

High-profile buyers of the manufacturer's BJ40 SUV include Francois Steyn, a professional rugby union player in South Africa, and Keylor Navas, who keeps goal for the Costa Rica national soccer team and currently plays for Nottingham Forest in the English Premier League.

Yang said the average price for BAIC's passenger vehicles sold overseas will rise to $14,000 this year from about $12,000 in 2022.

An Conghui, president of Geely Holding Group, said Chinese carmakers have been followers in the age of gasoline vehicles, but opportunities are now emerging for them to become leaders.

Amid a global tide of electrification, Chinese companies enjoy a first-mover advantage thanks to their production volumes, complete R&D systems, and the faster pace at which they launch new models, An said.

He added that Geely's premium arm, Lynk& Co, exported more than 35,000 vehicles last year, ranking first among Chinese carmakers with sales of more than 250,000 yuan ($36,382) for each vehicle. Some 97 percent of the marque's exports were NEVs.

An warned that foreign carmakers are catching up in terms of electrification, so Chinese brands must seize their opportunities if they want to become global companies.

Confidence boost

Lang Xuehong, deputy secretary-general of the China Auto Dealers Association, said Chinese auto companies have eight to 10 years to make their mark in the world.

"If they cannot do so during this time, there will only be a slim chance of them making the list of the top 10 carmakers," Lang said.

Zhao, from SAIC, said the past achievements of Chinese carmakers in global markets have motivated and increased the confidence of experienced players in the industry, including himself.

However, he quickly added that there is still a long way to go to reach the level of well-established international giants.

Zhao said that when SAIC planned the MG4 Electric, the aim was to make it as popular as Volkswagen's Golf, which he termed "a truly international model".

"Chinese manufacturers should offer their international customers great products and enable their local dealers to make money while making some themselves," Zhao said.

In addition to simply selling vehicles, some carmakers have started to launch factories in promising markets that are starting to go electric.

Last month, a groundbreaking ceremony was held in Thailand for BYD's first overseas NEV plant. Since arriving in the country in August, the company has sold more than 12,000 electric vehicles.

Although this figure is not high when compared with that in China, Thailand has set a goal for EVs to account for 30 percent of local vehicle production by 2030.

Located in the coastal province of Rayong, the plant is scheduled to start production next year, with an annual capacity of 150,000 NEVs. It will serve as a hub for BYD's EV production and sales in Thailand and neighboring member countries of the Association of Southeast Asian Nations.

Wang Liping, minister-counsellor for economic and commercial affairs at the Chinese embassy in Thailand, told Xinhua News Agency, "This move will not only create more job opportunities and drive economic development in Thailand, but will also promote the deep integration of the new energy vehicle industries in China and Thailand."

Construction also began last month on Hozon's plant in Thailand, which has a designated annual production capacity of 20,000 vehicles and is due to start operating early next year.

BYD and Hozon are joining the ranks of SAIC Motor and Great Wall Motors, which already have manufacturing operations in Thailand, a market long dominated by Japanese brands.

Zhu Qingyi, an assistant research fellow at the Center for International Knowledge on Development, said the EV market in ASEAN countries is poised for significant growth, as local governments are strengthening policy support for the sector. She said ASEAN members such as Malaysia, Singapore and Thailand have set phased targets for EVs and supporting infrastructure.

"Chinese carmakers, charging pile manufacturers, and engineering and power companies should seize this investment opportunity," Zhu said.

Data from the center show the EV market in ASEAN countries was valued at around $500 million in 2021 and is expected to reach about $2.6 billion by 2027.

By 2035, sales of EVs in the region are expected to surpass those of gasoline cars.