Competition between Chinese and Japanese car companies for investment in ASEAN is heating up

(Tokyo/Bangkok) - Chinese electric vehicle manufacturers have increased their investment in Southeast Asia in recent years, and Japan plans to develop its first joint vehicle production and sales strategy with ASEAN in response to competition from Chinese car companies, to help ASEAN countries strengthen the development of electric vehicles.

According to Nikkei Asia, Japan and ASEAN plan to hold a meeting of economic ministers in September this year to formulate a 10-year medium-term joint strategy, which is expected to include personnel training, decarbonization of production, procurement of mineral resources, cooperation in next-generation areas such as investment in biofuels, and promotion of environmental protection of ASEAN electric vehicles to consumers around the world.

Asean is an important production base for several Japanese automakers, including Toyota and Honda. Japanese automakers assemble more than 3 million vehicles in ASEAN each year, accounting for about 80 percent of ASEAN's total vehicle production, many of which are exported to the Middle East and elsewhere.

But Chinese automakers like BYD are producing far more cars than they can sell in China, so they are exporting large numbers of cars, especially electric cars, to Europe, Southeast Asia and other markets, taking market share with low prices. Japanese authorities and car companies have felt the competition from Chinese investment and increasingly feel the need to develop strategies to deal with it.

Japan invests in training talents and develops battery technology with ASEAN

In terms of talent training, the Japanese government intends to use the 140 billion yen (S $1.04 billion) aid fund provided by the Ministry of Economy, Trade and Industry to countries in the global South, and to provide digital technology training for workers at factories and parts suppliers.

In addition, Japan intends to use technology to quantify the carbon emissions of factories and help promote the shift to renewable energy sources.

In terms of investment in next-generation sectors, Japan and ASEAN will consider joint procurement of rare materials needed for electric vehicle batteries, explore research in areas such as recycling batteries, and develop biofuels made from waste cooking oil.

The rapid growth of Chinese automakers in Southeast Asia has forced Japanese automakers to tread carefully. The Thai government has offered subsidies and tax breaks to car companies that produce electric vehicles locally, setting off a wave of Chinese investment. Eighty-five percent of electric vehicles sold in Thailand last year came from China.

Thai Investment Promotion Board Secretary General there told the Bangkok Post that Chinese car companies plan to start producing electric vehicles in Thailand from the third quarter of this year and purchase production materials locally, so more electric vehicles sold in Thailand this year will be locally manufactured.

"Byd and GAC Aeon will start producing electric vehicles in Thailand in the third and fourth quarters, and Changan will start assembling electric vehicles locally early next year," said There.

Byd reportedly plans to produce 150,000 electric vehicles a year, GAC Aean's first phase aims to produce 50,000 vehicles a year, and Changan aims to produce 100,000 vehicles a year.