Thailand is pressing ahead with its ambition to become an EV mobility hub in Southeast Asia with the government seeking to attract over THB 1 trillion ($27.4 billion) in investments in the automotive industry.

Shorter-term, the country’s Board of Investment (BOI), anticipates an investment influx of THB 558 billion spurred by Prime Minister Srettha Thavisin recent roadshow across 14 countries. Electric vehicles, digital technology, semiconductors and logistics are some of the sectors that are set to benefit.

Under its “Vision 2030 Ignite Thailand,” the government is targeting a 30% electrification rate in Thailand’s vehicle production by 2030. That means 750,000 EVs of an estimated total of 2.5m units. Half of the EV production will be battery electric vehicles (BEVs).

“Key initiatives have been introduced by the government to bolster the EV industry, attracting both new and established players, with major Chinese firms and Japanese carmakers committing to substantial investments in Thailand,” Narit Therdsteerasukdi, BOI secretary-general said last week. “Efforts are ongoing to engage US and European EV manufacturers, along with leading battery cell producers, with projections of significant investment entries this year.”

Investor interest, EV demand continue to grow

Thai policies incentivise both investors and consumers, offering three to 11 years of tax breaks for EV production of all types, including BEV platforms. Among other benefits, the BOI also grants investment incentives for EV-related infrastructure, particularly charging stations, to ensure a favourable domestic ecosystem for EVs.

According to the government, a total of 78,554 passenger EVs have been registered since the start of subsidies in 2022, up until January 2024. BEV sales surged 600% in 2023 to 73,568 units. The vehicles were sold by 14 manufacturers and importers, who under the conditions of the EV3 scheme, will have to produce in Thailand at least one vehicle for each vehicle imported.

Source: FTI

Despite reducing EV purchase subsidies this year to up to $2,760 per vehicle, from up to $4,120 in the previous scheme, EV sales are expected to double this year, according to the Federation of Thai Industries (FTI). And the recent Bangkok International Motor Show (BIMS) was proof of the Thai EV industry growth, with Vietnam’s VinFast unveiling plans to set shop in the country.

VinFast said last week it signed letters of intent with 15 auto dealers in Thailand at the event. The initial step is to open 22 showrooms in the Greater Bangkok Area. Later, activities will expand to other regions of the country, including Chiang Mai, Khon Kaen, Ubon Ratchathani, Ayutthaya, and Chonburi. The carmaker’s portfolio includes scooters, cars and pick-up trucks, with six right-hand drive models available to Thai customers.

A presence in Thailand goes beyond its borders, as the country works to position itself as a Southeast Asian EV production hub. Yet, VinFast and any other entrants will face tough competition from companies such as China’s BYD, which is moving fast to establish a production network in the country.

Chinese automakers BYD and Great Wall Motor have had tremendous sales growth in Thailand, after establishing production and sales of EVs in the country in the past three years or so. The Thai auto industry, previously dominated by Japanese carmakers, has seen a shift in dynamics.  

In 2023, BYD sold 30,650 new energy vehicles in Thailand, ranking first in sales among all brands and achieving a 40% market share. The other top five best-selling brands – four of which from China – were Neta Auto, MG, Tesla, and Great Wall Motor’s Ora. The leadership of Chinese EV manufacturers in the Thai market continued early this year.

The so-called new force NEV company XPeng is also expanding into Thailand, joining this increasingly intensifying competition. The smart BEV automaker plans to open five new showrooms through a partnership announced last week with local dealership Neo Mobility Asia. It will start deliveries of right-hand drive versions of its G6 in Q3 in Thailand, Singapore, and Malaysia. 

Aggressive Chinese push, changing strategy

As the Thai manufacturing industry develops, investors’ strategies start to adapt. That’s the case for Chinese automakers which are now more aggressive than before. For example, when SAIC entered Thailand in 2012, it formed a joint venture for the production and sales of its MG brand vehicles with Thai conglomerate Chia Tai Group. However, nowadays, Chinese carmakers are taking more ownership of the investment and expansions by choosing partnerships and purchases, over joint ventures with local tycoons.

Last March, BYD broke ground for its assembly and production factory in Rayong, on the Thai eastern coast. The plant, which started trial production recently, is BYD’s first overseas passenger car factory 100% owned by the company.

Great Wall Motor is also building a plant to produce 100,000 EVs/year in the country, starting operations in 2025. Like the Japanese pioneers, Chinese NEV companies are also bringing companies supporting the value chain, such as power battery manufacturers. Great Wall Motor alone has three local teams: GWM Southeast Asia, GWM Thailand Sales, and GWM Thailand Parts & Components. 

The list of Chinese players in the Thai automotive sector continues to grow, with leading battery firm Gotion High-tech starting battery production in Rayong in December 2023 and state-owned China Automotive Technology & Research Centre opening a branch in Bangkok. The latter confirms Thailand is also raising attention at government levels.

As the BOI highlights, Thailand has unique advantages for the development of its “EV revolution.” In addition to its close ties to the Southeast Asia region, especially the ASEAN countries, it may also drive the increase in other right-hand drive markets in the world, such as Hong Kong, Japan, Australia and even the UK. 

In the words of Zhang Zhen, head of brand, Great Wall Motor ASEAN, Thailand is located on the main global shipping route, and therefore automobile exports can efficiently and conveniently reach various foreign destinations. “The cars produced by GWM Thailand factory have served the entire ASEAN market. In the future, the factory will also become GWM’s global passenger car manufacturing base,” he added.

That sentiment seems to be echoed by carmakers from elsewhere, including Germany’s Mercedes-Benz, which chose Thailand as its first location in Southeast Asia to manufacture its all-electric EQS saloon. Its Bangkok plant is targeting both domestic and international demand, helping make Thailand the EV hub it has pledged to become.