The arrival of Chinese automakers and a surge in local electric vehicle (EV) production are transforming Thailand’s auto sector, intensifying competition and putting pressure on long-dominant Japanese brands such as Toyota.
Thailand, the largest EV market in Southeast Asia, is projected to see a 40% rise in EV sales in 2024, surpassing 100,000 units, reversing an 8% decline last year, according to Suroj Sangsnit, president of the Electric Vehicle Association of Thailand (EVAT). “We expect the Thai EV market to grow significantly this year, driven by strong government incentives and increasing local production,” Suroj said.
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The government’s EV incentive program, which requires automakers to locally produce 1.5 vehicles for every imported unit between 2022 and 2023 to qualify for tax breaks, has played a crucial role in boosting sales. The program also offers price subsidies of up to 150,000 baht ($4,400) per vehicle. However, as the market expands, price competition has intensified.
Chinese automakers Great Wall Motor and GAC AION have responded by aggressively cutting prices. “Price wars will be prolonged, aggressive, and more widespread,” said Tita Phekanonth, senior analyst at Siam Commercial Bank’s Economic Intelligence Unit. She added that traditional gasoline-powered vehicles could also see discounts as automakers compete for market share.
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Thailand, a major regional auto production hub, exports 60% of its locally manufactured vehicles. In response to concerns over oversupply, the Board of Investment (BOI) adjusted its EV incentive program in December, extending the battery production timeline and introducing incentives for hybrid vehicles. BOI chief Narit Therdsteerasukdi noted that Thai-made EVs would soon be exported, easing concerns about market saturation. “They are not restricted to right- or left-hand drive either,” Narit said. “Chinese carmakers are producing both variants in Thailand to cater to international markets.”
Chinese automakers BYD, Great Wall Motor, Changan, and GAC AION have invested over 102.7 billion baht ($3 billion) in Thailand, according to EVAT. However, companies failing to meet local production requirements could face penalties of up to 400,000 baht ($11,806) per vehicle, said Suroj, who also serves as executive vice president of SAIC Motor-CP, a joint venture of China’s SAIC Motor and Thailand’s CP Group.
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BYD, Thailand’s top EV seller, has faced scrutiny over deep price cuts of up to 340,000 baht ($10,040) per unit but was cleared of wrongdoing by a consumer watchdog last year. “It will be competitive,” Suroj said. “Locally produced vehicles will only qualify for subsidies if they are sold this year, after which government support will cease.”
Source: Reuters