China's electric vehicle showdown
Nissan recently unveiled the Ariya, a new all-electric sport utility vehicle (SUV), the first of a new generation of electric vehicles intended to improve the performance of the struggling Japanese carmaker.
Chief executive Makoto Uchida called the Ariya the "flagship of the new Nissan" at its online launch this month from the company's headquarters in Japan. The company is hoping the model will sell particularly well in China, despite tough local competition from US-based Tesla.
The electric vehicle (EV) giant, led by polarising CEO Elon Musk, became the best-selling new EV in China in May this year, a combination of the brand's international cachet, strong reputation in China and the construction of an expansive production facility in Shanghai.
Tesla Giga Shanghai, also known as Gigafactory 3, was developed to build more Model Y midsize cars -- the brand's own all-electric SUV -- for Chinese consumers. The US$2-billion facility also aims to build up to 250,000 Model 3s each year, a long-range variant to better suit China's geography.
Meanwhile, Nissan reported a global operating loss of $380 million for the year ending March 31 -- its worst performance since the height of the global financial crisis in 2009. EVs are a critical component of Nissan's four-year plan to return to profitability, which includes launching more than eight new electric models by 2023.
Nissan views China as a desirable market due to generous government incentives for buyers and manufacturers of EVs. As a result, the Chinese EV market is formidable, with about 3.3 million units sold in 2019, compared with 1.4 million in the US.
While the Chinese government has introduced EV subsidies, weak charging infrastructure is a key barrier to the broader adoption of EVs across the country. Given China's vast landscape, an insufficient number of public charging stations makes it difficult for travellers to plan long journeys, hampering the ability for consumers to reduce their dependence on fossil fuels.
Closer to home, the Thai government announced in a policy earlier this year to make Thailand a regional hub for EVs within five years, with an ample supply of charging stations playing a key role to encourage use.
This policy would encourage the deployment of electric buses and motorcycle taxis, and the development of a charging station network nationwide. Thailand hopes to produce at least 750,000 EVs a year by 2030, representing 30% of its total automobile manufacturing capacity.
This aspirational plan is particularly interesting when considered alongside a statement made by Mr Musk earlier this month, suggesting the company is looking to build another Gigafactory within Asia over the next few years. Considering Thailand's position as the largest automobile manufacturer in Southeast Asia, might we become the next Tesla hub?
Suwatchai Songwanich is an executive vice-president with Bangkok Bank. For more columns in this series please visit www.bangkokbank.com