On April 28, South Korean media "The Herald Economy" published an article stating that due to fierce domestic competition, Chinese electric vehicle companies including BYD have recently been paying close attention to exports, i.e., global sales. BYD is rapidly expanding its exports to emerging markets such as Southeast Asia, Central and South America, and the Middle East, seizing the electric vehicle markets of major emerging countries.
However, in the core of the global electric vehicle market — developed countries — BYD has not yet made significant progress, especially in Europe, which is the largest market outside of China. Additionally, due to high tariffs, it is difficult to even attempt sales in the United States. In Japan's pure electric vehicle market, BYD's sales have surpassed Toyota's, but considering Japan's extremely low electric vehicle penetration rate and Toyota's lack of enthusiasm for producing electric vehicles, this cannot be considered a remarkable achievement.
In order for BYD to break through in developed country markets, even though their current profits in South Korea are small, they must expand the market from a long-term perspective. Furthermore, by studying the South Korean market, which demands consumer needs, provides rapid feedback, and is sensitive to trends, they seem to hope to actively utilize this market to develop global products.
So, what strategies can BYD adopt to enter the South Korean market? BYD will first emphasize cost-effectiveness, which is their greatest advantage.
BYD has captured the fiercely competitive Chinese car market with cost-effectiveness and has surpassed Tesla in global electric vehicle sales, thus being a company with potential in terms of cost-effectiveness. Especially with the ATTO 3 launched in the South Korean market, it is the first mid-size pure electric SUV model, and after subsidies, the actual purchase price is less than 30 million won, making the price attractiveness clearly undeniable. The pre-orders for the ATTO 3 have already reached nearly 2,000 units.
In addition, BYD's initial strategic focus is on expanding consumer experiences, alleviating concerns about Made-in-China products, and ensuring that BYD's technology and safety are directly verified. Particularly, by focusing on taxis, rentals, and car-sharing services and maximizing consumer contact, sales are likely to increase significantly.
However, BYD still has many tasks to overcome in the South Korean market. Representative examples include establishing a service network, enhancing consumer trust and brand image, and improving quality. BYD is aware of these challenges and is working to address them.
Considering South Korean consumers' sensitivity to after-sales service, BYD has set the longest warranty period (8 years or 160,000 kilometers) for all models sold in South Korea and plans to establish 30 service centers by the end of this year. Moreover, BYD is actively promoting the safety of its newly developed lithium iron phosphate battery, the "blade battery." They are simultaneously advancing their high-tech enterprise image and quality improvement, including increasing investment in next-generation solid-state batteries.
Some argue that BYD cannot surpass the limitations of the Made-in-China image. However, South Korean consumers have widely used and accepted Chinese products. This applies equally to the automotive sector.
For example, Tesla models imported into South Korea featuring core components manufactured in China at the Shanghai factory have become the best-selling cars in South Korea. Additionally, not only are KGM electric vehicles equipped with BYD's lithium iron phosphate batteries selling well, but there are also many public buses using BYD's electric buses daily. Volvo and Polstar under Geely have also reached a stage where they are considered safe cars in South Korea without any resistance.
Since BYD is a Made-in-China product, the likelihood of failure is relatively low. Therefore, from a long-term perspective, BYD is likely to capture a certain share of the South Korean market. Of course, this assumes that differentiated strategies in pricing and after-sales service will continue.
Then, what impact will BYD's entry have on South Korea? First, BYD's arrival is positive because it can expand the foundation of the South Korean electric vehicle market. By 2024, South Korea’s electric vehicle adoption rate is less than 10%, making it one of the countries with very low global electric vehicle adoption rates.
To achieve South Korea's government target of 4.2 million cumulative environmentally friendly vehicle sales by 2030, more brands and models, including BYD, need to be introduced. Additionally, from a consumer perspective, BYD entering South Korea is not harmful. This is not only because it expands the range of choices but also because the prices of competing models will decrease. In fact, Hyundai and Kia have recently started lowering the prices of their main electric models. Volvo, Stellantis, and other imported vehicles have also joined the electric vehicle price competition.
However, from a long-term perspective, the position of competing South Korean companies may become a problem. Hyundai and Kia together account for approximately 90% of South Korea’s electric vehicle market share. With BYD entering South Korea, the monopolistic position of local South Korean enterprises may be somewhat shaken.
Of course, it seems unlikely that BYD will make huge profits in the first two or three years after entering the South Korean market. But their entry into the South Korean market has just begun. Currently, BYD has only released 3 models in South Korea, while under its brand in China, there are 6 brands with a more diverse lineup of models.
Original source: https://www.toutiao.com/article/1830637654085644/
Disclaimer: This article solely represents the author's personal views.