China Direct

China is upping its bets on Southeast Asia's EV market as South Korea drives to narrow the gap

With strong government support and increasing purchasing power, Southeast Asia has emerged as a hotly contested arena for Chinese and South Korean automakers.

With strong government support and increasing purchasing power, Southeast Asia has emerged as a hotly contested arena for Chinese and South Korean automakers, vying to dominate the electric vehicle (EV) industry.

Since the beginning of this year, Chinese companies, which include not only automakers but also battery suppliers, have intensified their efforts in Southeast Asia, particularly in Thailand and Indonesia. These two major regional auto manufacturing hubs have become focal points of interest for Chinese companies seeking to expand their presence in the area.

Timeline of recent investments:

• In March, BYD reportedly set its sights on building an electric bus assembly plant and, eventually, a battery manufacturing factory in Indonesia. In the meantime, the company has commenced construction of a new factory in Thailand, projected to be finalized in 2024, with an impressive annual capacity of 150,000 electric cars.

• In April, a Thai official revealed that Changan Auto has committed to investing $285 million in a facility in Thailand.

• On May 6, Hozon Auto, the parent company of the EV brand Neta, disclosed plans to initiate the construction of a manufacturing facility in Thailand. This upcoming facility is anticipated to possess an annual production capacity of 20,000 vehicles.

• On May 11, GEM Co. Ltd., a Guangzhou-based battery and material recycler, announced a $500 million joint investment to build a nickel project in Indonesia, with the target of producing 20,000 tons of nickel intermediate products for the new energy sector annually.

• On May 13, SAIC Motor started building a factory in Thailand for its sub-brand MG. The planned manufacturing facility, set to sprawl over an area exceeding 437.5 rai (equivalent to around 173 acres), will accommodate battery production, parts fabrication, and MG's EV assembly line.

The accelerated deployment of Chinese firms in Southeast Asia is not only driven by the growing demand in the EV market but also by the determined efforts of their South Korean counterparts to catch-up.

Hyundai has surpassed Chinese automaker Wuling to become the top player in Indonesia's electric car market, capturing a 55% market share in February, according to the Korea Economic Daily. By comparison, the South Korean automaker delivered 1,829 units of its electric SUV IONIQ 5 last year, well behind Wuling Air EV's 8,053 units.

The IONIQ 5 was launched in Indonesia last April with a starting price of 748 million rupiahs ($50,186), three times that of runner-up Wuling and twice the average selling price in Indonesia.

Back in 2017, Wuling opened its first overseas production site in Indonesia with an investment of $700 million. This was well before Hyundai, which only started full production at its new plant in Indonesia in March 2022.

It's evident that Hyundai is playing catch-up aggressively. From January to April this year, Hyundai and Wuling sold about 1,700 and 1,000 EVs in Indonesia, respectively, according to Nikkei. Driven by the surge in demand, the company recently decided to increase production of its IONIQ 5 at the local plant to 1,000 units per month.

Hyundai has announced its plans to intensify marketing efforts in Thailand this year to drive sales of its EVs in the country. While the South Korean automaker currently lacks an EV assembly plant in Thailand, it strategically relies on its Indonesian factory to cater to the burgeoning demand and service the wider region.

The battle between EV battery suppliers heats up as well.

As aforementioned, GEM, China's largest battery recycler, has unveiled its intentions to build nickel intermediate products in Indonesia for the new energy sector, while SAIC has started to build a factory in Thailand, including battery production for the MG brand.

Indonesia stands as one of the foremost global producers of nickel, a key raw material for EV batteries. Thailand also boasts significant lithium reserves, another crucial raw material in the realm of EV batteries.

South Korean battery suppliers have also recognized the value of these resources. In June 2022, LG Energy Solutions (LGES) broke ground on a nickel processing plant in Indonesia. This venture is part of the LGES’s substantial $9.8 billion investment in the country aimed at manufacturing EV batteries. Prior to this, in September 2021, LGES and Hyundai began construction of a $1.1 billion factory in Bekasi, West Java, which will also produce EV batteries.

There are multiple reasons why South Korea and China are eyeing establishing battery-related supply chains in the emerging market: As global demand for EVs continues to rise, it is increasingly vital to have more raw materials under control; a more comprehensive local supply chain will help automakers gain more strength in the face of increasing competition; local governments offer incentives including tax breaks, land concessions, and financial assistance to attract battery manufacturers to the region, as well as cheaper labor costs.

Over the years, South Korean companies have established a strong presence in the field of nickel, manganese, and cobalt (NCM) batteries. However, as the market landscape evolves and priorities shift, there is a notable transition towards lithium iron phosphate (LFP) batteries. These LFP batteries offer several advantages, including lower cost, a longer lifespan, improved safety, enhanced ecological sustainability, and reduced risks of fire or explosion compared to NCM batteries. Consequently, Chinese battery manufacturers are beginning to dominate EV battery production globally.

LG Energy Solution, Samsung SDI, and SK On's combined share in the global EV battery market declined from 30.2% in 2021 to 23.7% in 2022, according to a February report by market research firm SNE Research, while at the same time, the market share of EV batteries supplied by Chinese manufacturers rose robustly.

But the ground is likely to keep shifting. South Korea's trade ministry last year identified batteries as one of the country's three strategic industries, along with semiconductors and artificial intelligence. LGES, Samsung SDI, and SK On are ramping up the development and production of LFP batteries.

The South Korean automotive sector shares certain parallels with its Chinese counterpart, particularly in aspects like supply chain and manufacturing capabilities. For instance, China is renowned for its world-class battery providers like CATL and Gotion High-Tech, as well as well-established automakers such as BYD, Wuling, and GMW, alongside emerging startups like Hozon. On the other hand, South Korea, while trailing China in EV battery market share, boasts a strong presence in automobile manufacturing, anchored by its two flagship brands, Hyundai and Kia.

Even though Chinese brands may not have achieved the same level of recognition as their counterparts in the traditional vehicle market, they possess significant potential for growth. "In the EV segment, consumers can easily jump over old brand walls and are willing to try new options," said Pitaya Tanadamrongsak, managing director of EV Primus, the Thai distributor of China's second-largest automaker, DFSK (Dongfeng).

Writer: Rebbeca Ren

For more information please click here. Our sincere thanks to Ms. Ren and the PingWest team for sharing this article.

 

Date for Diaries: Webinar - Thailand Investment Opportunities in the Electric Mobility Sector: 24 May 1600 (BJ)

Thailand Board of Investment (BOI), Paris Office cordially invites companies to join its webinar on the Electric Vehicle and Mobility Sector. Learn about the Incentive Packages for EV and mobility companies, current opportunities in this sector and experiences from companies like Robert BOSCH Automotive Technologies that are already in Thailand.

Agenda:

• 9 am BST / 1600 (BJ) Introductory remarks. Speaker: Thailand Board of Investment BOI

• BOI incentives packages for electric mobility and update on investment trends. Speaker: Thailand Board of Investment BOI

• Overview of opportunities for electric mobility in Thailand. Speaker: Electric Vehicle Association of Thailand (EVAT)

• Automotive and electric mobility sourcing from Thailand. Speaker: SNECI (an independent company providing services and operational consulting in the automotive and other industrial sectors)

• Success story in doing business in Thailand. Speaker: Mr. Martin Knoss, Regional President ASEAN - Robert BOSCH Automotive Technologies (Thailand).

To register for this free webinar please click here.

Our thanks to the Thailand Board of Investment and UKABC for kindly sharing this information

 

China's ChangAn Motors to invest in EV plant in Thailand

China's Changan Automobile to build an EV factory in Thailand

Our thanks to Pingwest for kindly sharing this insight.

Battery Battles - US EV strategy - Macro Polo

US favours securing EV supply chains over subsidizing consumers

Given the blowback from US allies on the Inflation Reduction Act’s (IRA) Clean Vehicle Credit, the US Treasury Department has responded by amending some sourcing requirements. If these changes are implemented as planned in March, they will modestly ameliorate allies’ concerns by allowing “friend-shoring” of certain parts of the electric vehicle (EV) battery supply chain. But the changes won’t make it much easier for EV manufacturers to qualify for the full $7,500 EV tax credits.

So when it comes to the competing goals of securing a domestic EV supply chain versus consumer subsidies to accelerate EV adoption, as highlighted in our previous analysis, the US administration appears to have made its choice in prioritizing supply chains over faster adoption.

In fact, the IRA’s subsidy scheme is similar to China’s that once excluded those EVs with foreign batteries from qualifying for subsidies. The main difference, of course, was that China already had its own domestic battery manufacturers.

Full analysis can be accessed here.

Our thanks to Macro Polo for kindly making this insight available.

Salt battery design overcomes 'bump' in the road to help electric cars go the extra mile

Using salt as a key ingredient, Chinese and British researchers have designed a new type of rechargeable battery that could accelerate the shift to greener, electric transport on our roads.

Many electric vehicles (EV) are powered by rechargeable lithium-ion batteries, but they can lose energy and power over time. Under certain conditions, such batteries can also overheat while working or charging, which can also degrade battery life and reduce miles per charge.

To solve these issues, the University of Nottingham is collaborating with six scientific research institutes across China to develop an innovative and affordable energy store with the combined performance merits of a solid-oxide fuel cell and a metal-air battery. The new battery could significantly extend the range of electric vehicles, while being fully recyclable, environmentally-friendly, low-cost and safe.

A solid-oxide fuel cell converts hydrogen and oxygen into electricity as a result of a chemical reaction. While they are highly-efficient at extracting energy from a fuel, durable, low-cost and greener to produce, they are not rechargeable. Meanwhile, metal-air batteries are electrochemical cells that uses a cheap metal such as iron and the oxygen present in air to generate electricity. During charging, they emit only oxygen into the atmosphere. Although not very durable, these high-energy dense batteries are rechargeable and can store and discharge as much electricity as lithium-ion batteries, but much more safely and cheaply.

In the early research phases, the research team explored a high-temperature, iron-air battery design that used molten salt as a type of electrolyte - activated by heat - for electrical conductivity. Cheap and inflammable, molten salts help to give a battery impressive energy storage and power capability and a lengthy lifecycle.

However, molten salts also possess adverse characteristics. University of Nottingham study lead, Professor George Chen said: “In extreme heat, molten salt can be aggressively corrosive, volatile and evaporate or leak, which is challenging to the safety and stability of battery design. There was an urgent need to fine-tune these electrolyte characteristics for better battery performance and to enable its future use in electric transport.”

The researchers have now successfully improved the technology by turning the molten salt into soft-solid salt, using solid oxide nano-powders. Professor Jianqiang Wang, from the Shanghai Institute of Applied Physics, Chinese Academy of Sciences, who is leading this collaboration project has predicted that this quasi-solid-state (QSS) electrolyte is suitable for metal-air batteries which operate at 800ºC; as it suppresses the evaporation and fluidity of the molten salts that can occur at such high operating temperatures.

Project collaborator, Dr Cheng Peng, also from the Shanghai Institute of Applied Physics, Chinese Academy of Sciences, explains a unique and useful design aspect of this experimental research. The quasi-solidification has been achieved using nanotechnology to construct a flexibly-connected network of solid oxide particles that act as a structural barrier locking in the molten salt electrolytes, while still allowing them to safely conduct electricity in extreme heat.

Professor Chen, who is leading a molten salt electrolysis laboratory in Nottingham, hopes the team’s “encouraging results” will help to establish a simpler and more efficient approach to designing low-cost and high-performance molten salt metal-air batteries with high stability and safety.

He adds, “The modified molten salt iron-oxygen battery has great potential applications in new markets, including electric transport and renewable energy which require innovative storage solutions in our homes and at grid-level. The battery is also, in principle, capable of storing solar heat as well as electricity, which is highly-desirable for both domestic and industrial energy needs. Molten salts are currently used at large scale in Spain and China to capture and store solar heat which is then converted to electricity - our molten salt metal air battery does the two jobs in one device.”

The full article, ‘Quasi-solid-state electrolyte for rechargeable high-temperature molten salt iron-air battery’, outlining the results, is published in the journal Energy Storage Materials.

ENDS

More information is available from Professor George Chen, Professor of Electrochemical Technologies in the Faculty of Engineering on +44 (0) 1159514171 or [email protected] or Emma Lowry, Media Relations Manager (Engineering) on 0115 84 67156 or [email protected]

The University of Nottingham

The University of Nottingham is a research-intensive university with a proud heritage, consistently ranked among the world's top 100. Studying at the University of Nottingham is a life-changing experience and we pride ourselves on unlocking the potential of our students. We have a pioneering spirit, expressed in the vision of our founder Sir Jesse Boot, which has seen us lead the way in establishing campuses in China and Malaysia - part of a globally connected network of education, research and industrial engagement. We are ranked eighth for research power in the UK according to REF 2014. We have six beacons of research excellence helping to transform lives and change the world; we are also a major employer and industry partner - locally and globally. Alongside Nottingham Trent University, we lead the Universities for Nottingham initiative, a pioneering collaboration which brings together the combined strength and civic missions of Nottingham’s two world-class universities and is working with local communities and partners to aid recovery and renewal following the Covid-19 pandemic.

UBS, JP Morgan and Honda finance Chinese NEV deal

CBI members, UBS, JP Morgan and Honda raised over three billion Yuan to support China’s biggest electric vehicle battery manufacturer, Contemporary Amperex Technology Limited (CATL).

Listed on the Shenzhen stock exchange, CATL raised nearly 19.7 billion Yuan from nine investors through a share placement last week. This amount more than triples the amount raised from its IPO two years ago. The deal aims to expand production capacity and fund research and development (R&D), underscoring CATL’s ambition to better compete with foreign rivals in a lucrative but increasingly competitive market.

The company, which supplies batteries to automakers including BMW and Volkswagen, raised about 6.3 billion yuan, or nearly a third of the total, from four foreign investors after a bidding process. That included 1.1 billion yuan from Swiss financial titan UBS and 1.5 billion yuan from two subsidiaries of American conglomerate JPMorgan Chase. The rest came from a subsidiary of major Japanese automaker Honda Motor Company

Behind the largest successful bid was Chinese investment company Hillhouse Capital Management Ltd., who contributed 10 billion yuan, more than half of the total funding.

Toyota invests $400m in Chinese self-driving auto start-up

 

 

CBI member, Toyota has announced that it has invested $400 million in Chinese technology start-up Pony.ai in a bid to develop a self-driving vehicle with connectivity services.

As a result of Toyota’s investment, the Japanese car giant will hold a 13% stake in Pony.ai, which following its latest funding round, which totalled $462m is now valued at $3 billion.

Subscribers to China Direct may remember that last September, Toyota launched its pilot self-driving car in China, Apollo, in partnership with Pony.ai. According to a statement issued by Pony.ai, the latest investment by Toyota will sustain that project while extending collaboration on mobility services.

According to a statement issued by both companies: “Strengthened ties will enable deeper integration of Pony.ai’s autonomous driving system with Toyota’s robust vehicle platforms and technologies.”

According to fellow CBI member, McKinsey, China has the potential to become the world’s largest market for autonomous vehicles. Foreign manufacturers face many market access hurdles in their efforts to enter the market, however, given that the Chinese government has only licensed the essential mapping data needed to inform an autonomous vehicle to domestic manufacturers. Pony.ai has already begun testing its autonomous vehicle software in Beijing and Guangzhou, and has licenses to further test its systems in California and Shanghai.

Accenture to acquire China auto tech start-up Futuremove Automotive

 

CBI member, Accenture has announced that it has agreed to acquire Futuremove Automotive, a Chinese vehicle connectivity solution provider, to bolster its service offering in digital consulting in smarted connected in-vehicle and mobility services, to meet rising demand from China-based auto clients.

Futuremove Automotive was founded in 2015 by John Wang, a former head of Microsoft’s China auto business, and has been developing a mixture of in-vehicle software packages and a cloud platform for inter-car connectivity. The Beijing-based start up had secured hundreds of millions of RMB in venture capital funding from some of China’s leading technology companies, such as Haier, and listed six of the world’s largest car manufacturers as its clients. Accenture have announced that Wang will join Accenture as a senior executive for its digital transformation solution business, Industry X.0.

Marcello Tamietti, Managing Director of Accenture Industry X.0, said: “The addition of Futuremove Automotive to Accenture will enhance the company’s service capabilities to drive digital innovation in the automotive industry. With the addition of Futuremove Automotive’s expertise, [Accenture] will be able to provide networking and travel services to a wider range of customers, and continue to drive innovation in this key market in China and its rapidly growing new energy vehicles sector.”

According to Accenture, revenue in the Chinese connected car segment is expected to grow at a rate of 16.5 % annually over the next four years. The company estimates that more than 73 million connected cars will hit the roads by 2023, nearly four times the current figure.

Toyota accelerates in China market

 

CBI member, Toyota has announced that it plans to extend its partnerships with leading Chinese automobile manufacturers, such as BYD, and ride-hailing group, DiDi, to significantly improve its market share in the China market.

Toyota currently only has a 5% share of the China market, and remains far behind other foreign – predominantly German – car makers such as BMW, Audi and Mercedes. Consequently, 5 months ago, Toyota CEO, Akio Toyoda, journeyed west to capture the attention of China’s automobile market.

Since coming in April, Toyota has signed deals with BYD and Contemporary Amperex Technology to develop batteries for electrified vehicles and invested $600 million in DiDi. Building on these initial investments, Toyota teamed up with Chinese start-up unicorn, Pony.ai to carry out a pilot programme for autonomous driving in July, which resulted in the Japanese marque joining Baidu’s self-driving car programme, Apollo.

As Chinese consumers become further entrenched in a trade war with the US, the Japanese group has benefited in a turn in fortunes. While reduced consumer spending saw China’s automobile market fall by 11.4% over the last 12 months, Toyota saw sales rise by 12%.

Mr. Toyoda said: “The potential rewards for Toyota are immense. Especially in this market, China, the speed of change is very, very fast. [Toyota] have to make a lot of effort to follow the changes in China. That’s the biggest issue for us.”

Company executives reportedly see China as one of the few markets where Toyota has the potential to sell its broad line-up of electrification technology used in hybrids, electric cars, and fuel cell vehicles. Beijing wants to become the world’s champion in fully electric vehicles by 2025, after all.

BP partners with DiDi to charge China’s new energy vehicle network

 

CBI member, BP has announced that it will enter into a joint venture with China’s leading ride hailing service provider, DiDi. The joint venture company will focus on developing new energy vehicle charging infrastructure across China to cater to the country’s developing NEV market.

Initially, the joint venture partnership will only focus on the installation and development of charging infrastructure. However, both companies have reported plans to extend the JV to include collaboration in areas such as loyalty programmes, convenience services and vehicle maintenance.

Yang Xiaoping, Chairwoman and President of BP China said: “China has provided tremendous growth opportunity for BP. Through cooperating with DiDi, BP will be able to actively provide differentiated products to cater to China’s fast-growing new energy vehicle charging market and further expand our brand presence in China.”

Fan Tu, CEO of BP’s downstream business said, “China is the world’s largest new energy vehicle market and presents tremendous opportunity for determining a business model that is both innovative and scalable. [BP] believes that entering into a joint venture with DiDi is the right way to respond to this fast-changing market. Moreover, by being in partnership with DiDi, BP will be to further expand its advanced mobile travel business globally, promoting energy transformation and low carbon solutions across the world.”

BP’s first NEV charging station has already been installed in Guangzhou in Guangdong Province and has the capability to charge 10 cars simultaneously on currents ranging between 60-100kw. It will subsequently be re-branded in light of the JV and serve as a model for the company’s expansion across China.