Compared with other Asian countries, it is undeniable that China is ahead of the game in passenger vehicle electrification, helped since 2010 by the government’s New Energy Vehicle (NEV) program and other initiatives that have led to it becoming globally dominant in this area. Chinese automakers are without doubt now formidable players in the field of Battery Electric Vehicles (BEVs). Their highly competitive BEV offering gives them an edge and helps ease the way into overseas markets.
In the rest of Asia, while the presence of Chinese brands remains limited in the Internal Combustion (IC) market, their presence is markedly stronger and rising rapidly in the BEV segment. Chinese brands made up around 4% of total passenger BEV sales in Asia ex-China in 2021, compared with only a 1% share of the IC car market. The Chinese share of BEV sales in the region is set to rise to 9% by 2023.
The increasing presence of Chinese players has created downward pressure on pricing in general, but this is especially the case for BEVs. The reason is that the gap in perceived quality of the Chinese brands against the benchmark Japanese brands is smaller for BEVs than it is for IC counterparts. At the same time, Chinese BEVs are priced much lower than their Japanese equivalents, enhancing the attractiveness of Chinese vehicles in this segment.
Nonetheless, competition in the BEV space has been intensifying in Asia ex-China as Japanese automakers, which had previously focused on IC and hybrids, are fast catching up in electrification. To name only a few developments, Toyota recently debuted its first dedicated BEV, the bZ4X SUV, under its electric bZ range that comprises seven models with various body types and sizes. Honda just announced plans to invest US$39 billion in electrification and software technologies over the next decade.