The globalization of new energy vehicles underscores the significance of localization efforts. Here's why it matters:
Market Adaptation: Localizing new energy vehicles involves tailoring them to meet the specific needs and preferences of different markets. This adaptation ensures that the vehicles are well-received and competitive in various regions worldwide.
Regulatory Compliance: Regulations and standards related to safety, emissions, and infrastructure vary from one country to another. By localizing production and design, manufacturers can ensure compliance with local regulations, thereby avoiding potential barriers to market entry.
Supply Chain Efficiency: Establishing local supply chains reduces lead times, transportation costs, and dependency on imports. This efficiency not only enhances competitiveness but also contributes to sustainability goals by minimizing carbon emissions associated with transportation.
Customer Experience: Localization extends beyond product design to after-sales service and support. Providing localized maintenance, repair, and customer service enhances the overall ownership experience, fostering customer satisfaction and loyalty.
Brand Perception: Consumers often value brands that demonstrate commitment to local communities and economies. By investing in localization, new energy vehicle manufacturers can enhance their brand image, earning trust and credibility among consumers and stakeholders.
In conclusion, localization is a crucial strategy for new energy vehicle manufacturers seeking to expand into global markets. By adapting their products and operations to local contexts, they can navigate regulatory complexities, meet consumer preferences, and establish a strong foothold in the competitive automotive industry.
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Venturing into the open seas is a challenge faced by all industries, particularly China's new energy vehicle sector.
According to data previously released by the National Development and Reform Commission, in 2023, China's production and sales of new energy vehicles accounted for over 60% of the global market share, maintaining the top position worldwide for nine consecutive years. Among them, exports of new energy vehicles reached 1.203 million units, a year-on-year increase of 77.2%, setting a new historical high. Alongside the continuously surging export figures for new energy vehicles comes the question of the global market they face, local demand, and how to establish a foothold in overseas competition.
Recently, at a sub-forum of the Boao Forum for Asia Annual Conference 2024 titled "The Future of the New Energy Vehicle Track," Carlos, Deputy Minister of Transportation of Colombia, John Cockerill, CEO of a Belgian electrolytic cell manufacturer, Mariano, Secretary of State of the Ministry of Industry, Science, and Innovation of Cambodia, and Mr. Bezhemin, Director and Partner of Oway Consulting in the United States, discussed the opportunities and challenges in the globalization process of new energy vehicles.
It is noteworthy that the four guests come from different countries, with Carlos and Mariano both hailing from emerging economies. The sub-forum's discussions largely revolved around the development and challenges of new energy vehicles in emerging economies.
Cambodian car owners regret buying new energy vehicles
Southeast Asia is the second largest market for China's new energy vehicle exports after Europe. According to statistics from the China Passenger Car Association, in the first half of 2022, China exported 58,400 new energy passenger cars to Southeast Asia, accounting for 16.1% of the total. According to customs data, in the first half of 2023, 75,000 electric cars were exported to Thailand, a year-on-year increase of 216%, with the unit price rising from $7,000 to $15,000 compared to the previous year.
Contrary to the growing export figures for new energy vehicles, in many parts of Southeast Asia, people's awareness of new energy and the local infrastructure for new energy are still not well developed. According to Mariano, some people are not familiar with new energy vehicles in reality and do not have a deep understanding of how to use them or the benefits they can bring. He mentioned a fact that in Cambodia, people buy electric or new energy vehicles but want to sell them after using them for a few months.
"There are too few charging stations, the charging time is too long, and the cruising range is only around 100-200 kilometers. Although mobile charging piles were promised when selling electric cars, the charging speed of mobile charging piles is too slow, taking a whole night to fully charge," Mariano said.
Mariano stated that the essence of the problem lies in the fact that new energy vehicle companies have not solved the problem of charging infrastructure while selling cars. He believes that "people not only need a car but also need a solution." This reminded him of the situation of electric cars in the Netherlands ten years ago, "Ten years ago in the Netherlands, there were electric cars, but the cruising range and charging problems were not solved at that time. The final solution was to have two cars, one charging and one carrying passengers."
But now the problem of providing solutions to car owners has also been thrown to Chinese car companies. As a global powerhouse in electric vehicle production, "innovative solutions need to be provided to countries along the Belt and Road Initiative," Mariano said.
Two-wheelers and three-wheelers are essential
Although the forum focuses on "new energy vehicles," the four guests seemed particularly interested in two and three-wheeled electric vehicles.
"In the Americas, Europe, and China, people tend to buy new energy vehicles. In Europe, 95% of people drive cars, but in India, this figure is only 20%, with the remaining 80% being three-wheelers or motorcycles," Bezhemin mentioned the significant differences in transportation vehicles in different countries.
Mariano also introduced that there are "many, many" two and three-wheeled electric vehicles in Cambodia, many of which are imported from China and South Korea. He believes that two and three-wheeled electric vehicles are excellent investment projects for Cambodia, "suitable for urban travel, charging once a day, and can be ridden all day. People are very willing to buy them."
According to the "Electric Vehicle (EV) Charging Station Roadmap" released by the Ministry of Public Works and Transport (MPWT) of Cambodia earlier this year, Cambodia is expected to have over one million electric two-wheelers and three-wheelers between 2030 and 2040, and approximately 100,000 electric cars between 2035 and 2042. Carlos also mentioned that Colombia currently has 80 million electric vehicles, including a certain number of two-wheelers.
According to statistics from the ASEAN Automotive Federation (AAF) and institutions such as MarkLines, Southeast Asia was the world's second-largest motorcycle market in 2022, accounting for 21% of global motorcycle sales, with annual sales of around 10 million motorcycles in Indonesia, Thailand, and Vietnam combined.
With Southeast Asian countries pushing for the transition of two-wheelers from gasoline to electric, the development of electric two-wheelers in Southeast Asia is expected to accelerate. According to information disclosed on various government official websites, the Philippines proposed to grant tariff exemptions on imported electric motorcycles, electric two-wheelers, and their components starting from 2023 for the next five years. In 2023, Indonesia and Thailand decided to provide subsidies of more than 3,000 CNY per electric motorcycle.
"Observing the demand for two and three-wheelers in the Southeast Asian market, BYD and Geely did not start with passenger cars in countries like India and Southeast Asia but started with two-wheel electric vehicles and gradually transitioned to new energy passenger cars," Mariano said.
In addition to electric trucks, which are also considered essential for Chinese new energy vehicle companies in overseas markets, especially for emerging economies, Bezhemin stated that 90% of cars in Uzbekistan are Buicks, but they are buying more BYD vehicles. European manufacturers find it difficult to compete with Chinese new energy vehicles in these markets. However, in some other markets, such as India, where electric trucks are beginning to be produced, and two and three-wheelers produced by local new energy vehicle companies, there is indeed a possibility of competition with China. Infrastructure and Localization
"My suggestion to Chinese car manufacturers is, just like Tesla, they should go global. Tesla has built a factory in Berlin so it can sell locally. I think Chinese car manufacturers should do the same, going overseas to build factories and sell," said Ma Yino.
Deeper localization and supporting infrastructure were common recommendations from the four guests regarding the expansion of new energy vehicle companies into international markets. Be Zhemin believes that 50% of China's electric car exports go to Asia, the Middle East, and Africa, markets with different characteristics from traditional automotive markets, thus presenting very different challenges. "It's essential to understand local conditions and needs well and come up with our solutions."
For instance, in Southeast Asia, local car manufacturers tend to import batteries from China, Japan, and Korea to manufacture their own motorcycle brands, which is an interesting phenomenon to watch. Ma Yino also emphasized that it doesn't necessarily have to be electric cars; energy diversification and decarbonization are crucial. Therefore, in an emerging market, one should not only consider labor differences but also other factors like batteries.
Collaborating with local companies on localization is seen as an excellent way for Chinese new energy car companies to tap into overseas markets. This approach can not only expedite understanding local demands but also accelerate solving infrastructure issues such as the widespread installation of charging stations, with governments playing a significant role. Regarding this, Bosovarn Let said frankly that under Cambodian regulations, foreigners cannot own land, which is why joint ventures are more suitable for investors.
"By establishing joint ventures, Cambodia can provide land to investors, which is good news for Chinese investors. Cambodia warmly welcomes cooperation with China, and there are already many Chinese investors in Cambodia. Under this framework, Cambodia also receives a lot of support from the Chinese government. We don't have the capacity to construct everything, but we contract these projects to Chinese companies, and after completion, they become government assets," said Bosovarn Let.
Previously, the EU had introduced the "Fit for 55" package plan, requiring member states to accelerate the construction of infrastructure for new energy vehicles. By 2026, at least one electric vehicle charging station should be set up every 60 kilometers on major roads, and one truck charging station every 120 kilometers, with half of them to be completed by 2028. However, Be Zhemin stated that the EU's acceleration strategy for electric vehicle charging facilities may not be useful for other markets, which is closely related to localization.
"The EU has always considered itself a pioneer in decarbonization and has set a goal of not selling internal combustion engines by 2035. However, this plan is impractical for the situation in Europe, as it will destroy many job opportunities. Thousands of job opportunities have disappeared over the past few months," said Be Zhemin.
