In 2024, Taiwan's automotive and motorcycle sectors have faced unexpected developments and challenges. Local content requirements and domestic production issues are creating significant ripples across both industries, particularly affecting the electric motorcycle sector.
The proliferation of diverse battery-swapping systems is boosting Taiwan's electric motorcycle industry, setting the stage for long-term growth. However, the government's mandate to increase the localization of parts and components has become a critical concern. This requirement aims to enhance the competitiveness of the domestic supply chain, address cybersecurity issues related to vehicle connectivity, and ensure overall vehicle safety.
Sanyang Industry, Taiwan's only company with expertise in both two-wheel and four-wheel vehicles, has been cautious in developing electric motorcycles. While its progress may appear slower compared to others, the company remains confident and continues to expand its presence in both the white license plate and green license plate markets.
Sanyang's chairman, Ching-yuan Wu, recently highlighted that the entire battery-swapping service ecosystem developed by CPC Corporation, including batteries, electronic control systems, motorcycles, and network systems, is built in Taiwan. Wu emphasized that this self-reliant approach is crucial for competing on the international stage, reinforcing Sanyang's commitment to increasing the localization rate.
Similarly, Kwang Yang Motor (KYMCO) chairman Allen Ko has underscored the company's open Ionex platform, which aims to unite battery suppliers, motorcycle manufacturers, and distributors interested in battery swapping services within the electric motorcycle industry.
Gogoro faces scrutiny over low local content
As Taiwan's leading electric motorcycle vendor, Gogoro has faced increased scrutiny. DIGITIMES reported that Gogoro's Jego model, launched in February 2024, used components imported from China, resulting in a local content rate below 20%. Prior to this, similar concerns were raised about the Viva model.
In response to these concerns, Gogoro has stated that it adheres strictly to government regulations and emphasizes that all its software and hardware products are independently developed in Taiwan. Vehicles sold domestically are produced either at its Guishan plant in Taoyuan or by contracted Taiwanese manufacturers.
Supply chain insiders highlighted two key factors behind the increased attention to local content and domestic production in the electric motorcycle market.
Firstly, government subsidies serve as a significant incentive. The Ministry of Economic Affairs' "Implementation Guidelines for Subsidies to Promote the Electric Motorcycle Industry" stipulates that components and materials used in motor assembly, stators, rotors (excluding permanent magnets), and controllers must be domestically produced to qualify for subsidies. This government support has encouraged many companies to enter the electric motorcycle market, as developing these vehicles is a capital-intensive process. While using non-localized components can reduce costs, it risks non-compliance with regulations.
Secondly, the localization rate of components can impact the terminal selling price and, potentially, production volume. Fluctuations in the localization rate may lead to short-term price changes, which could affect consumer demand and production volumes. In fact, recent government scrutiny of localization requirements has led to component shortages for some models, with some even facing production suspensions.
Manufacturers are keenly aware of the government's focus on localization and are actively working to replace components or increase the proportion of domestically sourced materials. As Taiwan's electric motorcycle industry evolves, it will become increasingly clear which companies are effectively navigating these challenges.
