Chinese EV IPO drives a precarious line in Asia
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
By Katrina Hamlin
HONG KONG, July 26 (Reuters Breakingviews) -Chinese electric-car maker Hozon is putting Southeast Asian drivers at the centre of its pitch for an initial public offering. But the company and rivals like BYD will find their ability to power up sales is limited.
Hozon’s Neta, which sells battery-powered and hybrid cars for between $15,000 and $45,000, has become Thailand’s second-largest EV brand behind BYD 002594.SZ, 1211.HK. That helped more than double the company's overall sales between 2021 and 2023 to almost $2 billion.
Expanding there, as well as in Indonesia and neighbouring countries, is the selling point for its Hong Kong listing, which IFR report could raise up to $1 billion. Southeast Asia, according to Hozon's IPO prospectus, has fewer than 100 cars per thousand people, similar to China a decade ago.
Hozon isn’t the only one to spot low-hanging fruit. Facing overcapacity at home, plus tariffs and other unfriendly policies elsewhere, BYD, Geely, Great Wall Motor 601633.SS and SAIC Motor 600104.SS have set the sat nav for Southeast Asia. The region's raw materials, existing auto supply chains and affordable labour all add to the appeal.
Competition is fuelling price wars. Bangkok is investigating more than 100 complaints over BYD’s repeated cuts, despite the company offering cash back to consumers concerned they overpaid. Although Hozon co-founder Fang Yunzhou said he “does not rely on pricing advantages”, Neta’s Thai website touts summer discounts worth more than $1000 per vehicle.
The risk is twofold. First, though the region boasts few homegrown marques, regulators may want to protect not just buyers but also incumbents which have invested locally over many years. Japan and ASEAN economic ministers will meet in September to develop strategies to support companies such as Toyota Motor 7203.T, the Nikkei reports: Japanese manufacturers account for around 80% of production there.
Second, the spoils seem small. The prospectus forecasts total Southeast Asia EV sales will reach 864,300 by 2028 – less than a tenth of China’s new energy vehicle sales last year. Meanwhile, building brands and factories overseas, on top of research and development, is expensive: Hozon’s net loss neared $1 billion in 2023.
Hozon’s factories in Thailand and Indonesia have a combined annual capacity of just over 100,000, and a new site in Malaysia will more than double that in 2025. That suggests it and rivals are relying on exports to make forays into the region more worthwhile.
If they're unsuccessful, their Southeast Asia journey will be costly and crowded.
CONTEXT NEWS
A Thai investigation into discounts from China's BYD will continue even though the carmaker's distributor in the country instituted a cash-back programme in response to complaints from consumers who felt they overpaid for their electric vehicles, a senior official said on July 19.
Chinese electric-vehicle manufacturer Hozon filed an application on June 26 for a Hong Kong initial public offering . The deal could raise as much as $1 billion, IFR reported, citing sources. The proceeds will be used to construct factories, fund research and sales, and expand overseas, according to the preliminary prospectus.
BYD produced Thailand’s best-selling electric-vehicle in 2023, followed by Hozon’s Neta brand, according to official data.
Graphiuc: Car ownership is still very low in Southeast Asia https://reut.rs/3LLwB9X
Graphic: Electric-car sales in Southeast Asia are rising https://reut.rs/4dlkBrL
Editing by Antony Currie and Aditya Srivastav
Últimas notícias
Isenção de Responsabilidade: As entidades do XM Group proporcionam serviço de apenas-execução e acesso à nossa plataforma online de negociação, permitindo a visualização e/ou uso do conteúdo disponível no website ou através deste, o que não se destina a alterar ou a expandir o supracitado. Tal acesso e uso estão sempre sujeitos a: (i) Termos e Condições; (ii) Avisos de Risco; e (iii) Termos de Responsabilidade. Este, é desta forma, fornecido como informação generalizada. Particularmente, por favor esteja ciente que os conteúdos da nossa plataforma online de negociação não constituem solicitação ou oferta para iniciar qualquer transação nos mercados financeiros. Negociar em qualquer mercado financeiro envolve um nível de risco significativo de perda do capital.
Todo o material publicado na nossa plataforma de negociação online tem apenas objetivos educacionais/informativos e não contém — e não deve ser considerado conter — conselhos e recomendações financeiras, de negociação ou fiscalidade de investimentos, registo de preços de negociação, oferta e solicitação de transação em qualquer instrumento financeiro ou promoção financeira não solicitada direcionadas a si.
Qual conteúdo obtido por uma terceira parte, assim como o conteúdo preparado pela XM, tais como, opiniões, pesquisa, análises, preços, outra informação ou links para websites de terceiras partes contidos neste website são prestados "no estado em que se encontram", como um comentário de mercado generalizado e não constitui conselho de investimento. Na medida em que qualquer conteúdo é construído como pesquisa de investimento, deve considerar e aceitar que este não tem como objetivo e nem foi preparado de acordo com os requisitos legais concebidos para promover a independência da pesquisa de investimento, desta forma, deve ser considerado material de marketing sob as leis e regulações relevantes. Por favor, certifique-se que leu e compreendeu a nossa Notificação sobre Pesquisa de Investimento não-independente e o Aviso de Risco, relativos à informação supracitada, os quais podem ser acedidos aqui.
