Chinese electric vehicle manufacturer BYD's entry into Vietnam has been marked by partnership challenges and production delays, complicating its broader expansion strategy in Southeast Asia.

Partnership issues disrupt plans for growth

Chinese EV manufacturer BYD has encountered obstacles in its attempt to expand into Vietnam. The company's efforts to establish a dealer and production network have been hindered by the suspension of cooperation with its principal local partner.

On 6th May 2024, New Energy Holdings (NEH), BYD's Vietnamese partner, terminated their collaboration. This partnership had been central to BYD's objective of opening 50 dealerships across Vietnam by the end of 2024.

NEH, a subsidiary of Tasco Auto, had been tasked with overseeing at least nine showrooms, including outlets in Hanoi and Ho Chi Minh City. The disruption has cast doubt on the feasibility of the expansion plan.

Impact on Vietnam's car sales and distribution

By mid-2024, BYD had aimed to open between 15 and 20 showrooms throughout Vietnam. These plans are now uncertain following NEH's withdrawal, as the dealer network is essential for expanding customer access and brand presence.

Although BYD has stated that its operations in Vietnam will continue, the loss of NEH, which controlled a significant portion of the planned dealership network, raises concerns about achieving sales targets and maintaining service delivery.

Aspirational sales targets for 2024

BYD has set a goal of selling 5,000 vehicles in Vietnam in the second half of 2024. This target is based on the country's automotive market, where in 2024 6% of total sales were of electric vehicles.

Production and local manufacturing

Initially, BYD planned to import vehicles from China into Vietnam. By the end of 2024, the company intends to shift production to Thailand as part of its wider strategy to diversify supply chains and address demand in Southeast Asia.

Previously, BYD had announced plans to establish an EV manufacturing facility in the Phu Tho region of Vietnam. Reports indicate that these plans have been postponed in favour of a larger US$1.3 billion facility in Indonesia, which has affected the company's local manufacturing ambitions.

Competition in Vietnamese EV market

BYD faces competition in Vietnam, particularly from domestic manufacturer VinFast, which currently holds a dominant position in the EV market. The competition has intensified with the entry of other international brands, including Wuling, whose Hongguang Mini EV has achieved market presence. BYD's line-up, which includes models such as the Dolphin, Seal, and Atto 3, provides the company with options to establish a position in the market.

Conclusion

BYD's expansion into Vietnam's automotive sector is affected by the termination of a key partnership and delays in setting up local production. However, the company continues to pursue its expansion strategy in line with the growth of Vietnam's EV market and its wider regional plans.