China Offers Value-for-Money EVs, But Consider Other Factors
It’s all very well for Malaysian car buyers who have been wooed by more than 10 new and attractive Chinese car models over the past few months.
The BYD M6: A Prime Example
The latest of this is BYD’s multipurpose van, a seven-seater M6 (MPV), being sold for an incredible value-for-money price starting from RM110,000. BYD is the world’s largest EV car maker by unit sales.
Beyond the Initial Attraction
While the ascendance of Chinese car companies presents unprecedented opportunities both to car buyers as well as investors, there are other considerations. For the car buyer, the value-for-money proposition is unarguable. Malaysian car buyers who would not have considered buying a Chinese car just six months ago are now talking about it.
Long-Term Concerns
However, in the longer term, there is the worry that some brands might withdraw from less significant overseas markets such as Malaysia, relative to say, Indonesia and Thailand with their bigger populations. When brands downsize, car owners are likely to face difficulty with spare parts, meaning lifetime or 1,000,000km warranties may end up irrelevant. This has already happened with legacy brands such as GM and stranded Chevrolet owners, and it can happen again with new brands from China.
State-Owned Enterprises
On the other hand, some of the top car makers in Beijing and Shanghai are state-owned enterprises. They are also quite advanced and too big to fail. On top of that, there is the Chinese cultural aversion to losing face which may also come into play.
China’s Rise to Prominence
China became the world’s largest car market in 2009 when it overtook the US in unit sales. Since then, China’s market has continued to expand significantly with a strong emphasis on electric vehicles.
Consolidation and Innovation
Since then, the number of car makers has consolidated to about 90, from some 500 marques. All the top Chinese brands are already in Malaysia, some in their own right and others through franchises awarded to domestic Malaysian companies. As for the privately-owned car companies, the most famous of which is BYD, they are pushing the frontiers of battery technology.
Vertical Integration and E-Axle
Their vertical integration of the manufacturing processes and re-engineering of EVs have pushed China’s auto industry years ahead of legacy car makers. For instance, they have decided that EVs do not need the traditional gearbox and are instead integrating its four components into an e-axle.
Malaysia’s Response
On the macro side of things, Malaysia’s investment, trade and industry ministry has demonstrated a commendable agility in attracting automotive investments from technology leaders such as Tesla as well as some of China’s top 10 car makers.
NAP 2020 Review
The National Automotive Policy 2020 (NAP 2020) is likely to be updated, drawing from hints dropped by Tengku Zafrul Aziz, the investment, trade and industry minister. One of the major revisions that should be considered is to include plug-in hybrid vehicles (PHEVs) in NAP 2020. Currently, Malaysia’s fiscal policy to incentivise the decarbonisation of the land transport sector is limited to waiving taxes on battery electric vehicles (BEV) but not PHEVs.
PHEVs: A Different Approach
There appears to be two different approaches to PHEVs. Europe’s car makers’ want to make them powerful cars capable of doing 0-100km sprints in less than five seconds. On the other hand, China’s approach is to use PHEV technology to promote fuel economy, employing 55 kW batteries for about 100km of pure electric drive.
New Force Companies
One more element to be reviewed in the NAP2020 is how to attract the so-called New Force companies such as Xioami and Huawei, both phone makers, to Malaysia. Chinese cars are great for connectivity and Advanced Driving Assistance Systems (ADAS), with these New Force companies leading the way.
Conclusion
China offers value-for-money EVs, but other factors must be considered. While the ascendance of Chinese car companies presents opportunities, there are concerns about brand withdrawals from less significant markets and the need for clear achievements for completely knocked down (CKD) EVs in terms of localisation of components by Chinese car companies.
FAQs
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What is the price of the BYD M6 MPV in Malaysia?
The BYD M6 MPV is priced from RM110,000. -
What is the approach to plug-in hybrid vehicles (PHEVs) in Europe and China?
Europe’s car makers want to make PHEVs powerful, while China uses PHEV technology to promote fuel economy. -
What are the top car makers in Beijing and Shanghai?
Top car makers in Beijing and Shanghai are state-owned enterprises that are quite advanced and too big to fail. - What is the National Automotive Policy 2020 (NAP 2020) and its planned revisions?
NAP 2020 is likely to be updated, with potential revisions to include plug-in hybrid vehicles (PHEVs) and clarify achievements for completely knocked down (CKD) EVs in terms of localisation of components by Chinese car companies.