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15 March 2023

BYD commits to Thai plant as BMW is lured back to Oxford

Build Your Dreams, or BYD as it’s better known, has broken ground on it’s a new battery plant in Thailand that is expected to be operational by 2024 and have an annual production capacity of 150,000 electric vehicles.

The expansion comes after slowing demand in China and lengthy Covid-19 restrictions sent Chinese companies pursuing the natural next step of expanding into neighboring countries in search of new demand sources. Thailand specifically was chosen in part due to the country’s generous incentive schemes for manufacturers to set up shop within the country, alongside the country’s recently introduced EV subsidies and tax reduction schemes. The country is aiming for 700,000 EVs to be produced within the country annually by 2030, which at this rate seems almost pessimistic considering the country’s expected rate of growth and announced +production facilities.

While Thailand was late to the party, introducing consumer EV subsidies in September 2022, the subsidies largely coincide with the increasing availability of low-cost EVs that appeal to less economically developed markets like Thailand, we see this as a deep understanding of when exactly subsidies will affect market demand and introducing subsidies accordingly. It’s important to remember that Thailand isn’t in a position to do the heavy lifting with massive subsidies to bring EV prices down, the decision to hold off on subsidies until it would significantly affect EV demand shows a commendable level of restraint from jumping on the EV bandwagon too early. Europe, China, and North America were always going to lead initial demand, with China supporting the bulk budget markets while Europe and North America gave cause for a luxury market for early adopters.

Of the 150,000 vehicles produced in the new Thai factory, just 10,000 are expected to be sold to a Thai audience, with the rest being exported throughout the Asia-Pacific markets. China-based Hozon Auto also recently broke ground on an EV manufacturing facility within Thailand, admittedly with a smaller production capacity of 20,000 vehicles per year, but that’s nearly 25% of Thailand’s 2030 target hit by the end of next year, that’s a good start all things considered.

BYD isn’t done there though, Europe remains the most lucrative EV markets that remains largely untapped by Chinese OEMs. The company aims to become one of Europe’s top 3 EV companies by the end of the decade, which while this seems ambitious, we have seen through Europe’s increasingly favorable attitude towards low-cost iron-rich batteries that European markets can be incredibly price sensitive. This would allow BYD to push its advantage before incumbents effectively transition from ICE vehicle production to EVs.

According to BYD’s head of European operations, the company has a shortlist of countries within the region it is considering for its manufacturing facilities that will inevitably service the region. This includes but is not necessarily limited to Germany, France, Spain, Hungary, and Poland. Due to this information being released through an interview with the Financial Times, a UK-based media outlet, the topic of why the UK wasn’t under consideration came up despite the elephant in the room. Shu said that the UK didn’t even make BYD’s longlist, let alone the shortlist of potential locations as a result of the instability caused by Brexit and the following fallout.

BYD’s decision to invest in a plant in Thailand shows us the company’s priorities in where it wants manufacturing facilities. Thailand offers cheap labor, great port access, a central location within the Asia-Pacific region from which to export into, and a government China has relatively positive relationships with. The UK has exactly none of those benefits, with its primary benefit of strong domestic demand waning relative to the countries within the EU as it has still failed to recover significantly from the lifting of Covid-19 restrictions, all the while the recent Britishvolt fiasco spoke volumes as to where government support lay at the time.

Last year the BMW group announced it would be moving Mini production out of the UK to China in a collaboration with Great Wall Motors with the release of the Mini’s EV successor. Last week BMW announced it would be making a £500 million ($603 million) investment into its Oxford plant to produce Mini EV models in the future, following an expected £75 million investment from the UK Government’s Automotive Transformation Fund. While we might get used to the UK government learning from its mistakes, that would be unwise considering expected investments in CCS and nuclear expected to be announced in today’s budget.

At the end of the day, companies are companies, the ultimate decider of decisions such as those being made by BYD and the BMW group are primarily economic. OEMs have the upper hand as countries are effectively begging for them to set up shop as the industry remakes itself in the shift to EVs.