Thai gov’t EV subsidies spark price war

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Thailand’s automotive industry, the nation’s fourth-largest sector, contributes around 11% to the nation’s GDP and employs over 750,000 workers. However, recent government policies and agreements with China aimed at boosting EV production have led to issues including factory closures and EV price wars due to oversupply. 

The Thai government’s subsidy scheme, launched in 2022, aimed to make EVs more affordable by lifting tariffs and offering grants of up to THB 150,000 (USD 4,130) per vehicle to Chinese manufacturers. In return, the Chinese companies agreed to match local production numbers with imports by 2024. The programme, introduced under the ASEAN-China Free Trade Agreement in 2022, also aims to convert 30% of its annual vehicle production to EVs by 2030. 

In Southeast Asia (SEA) as a whole, EV sales more than doubled in Q1 year-on-year, with BYD accounting for 47% of sales. Chinese firms have established a significant lead over Japanese counterparts, which dominate Thailand’s internal combustion engine sector. In Q1, 75% of EV sales were attributed to Chinese firms, while Japanese and Korean firms saw a 7% decline. 

The scheme has not been without problems, however. Official sources point towards a glut of approximately 90,000 EVs in Thailand, as 185,029 EVs have been imported to Thailand, but only 86,043 registrations have been recorded, according to Nikkei Asia. 

China backs Thai EV makers to nearly USD 1.5bn

In July, BYD opened its first Southeast Asian plant in Rayong, 183km south of Bangkok, part of a USD 1.44bn investment wave from Chinese EV manufacturers in Thailand. If plug-in hybrid vehicles are included, and not only “pure electric” BEV cars, BYD leads Tesla as the world’s largest EV company.

BYD’s USD 486mn factory aims to produce 150,000 vehicles annually and employ approximately 10,000 workers. At last month’s inauguration ceremony, BYD CEO-President Wang Chuanfu praised Thailand’s EV programme for a new era of auto manufacturing and championed the transfer of Chinese technology to the region. Chuanfu said: “Thailand has a clear EV vision and is entering a new era of auto manufacturing:  we will bring technology from China to Thailand.”

BYD has meanwhile slashed the price of its new Atto model by THB 340,000 (USD 9,375), a 37% reduction from the launch price of THB 899,000. Similarly, Neta reduced the price of its V-II model by THB 50,000 (9%) from its initial THB 549,000, underscoring the competitive pressure in the market. 

The surge of Chinese EV production has also led to production cuts and even factory closures in Thailand, impacting both EV makers and local car parts companies, which are generally excluded from Chinese supply chains. 

Chinese EV firms expansion continues undeterred

Despite the oversupply and subsequent price wars, Chinese EV manufacturers continue to invest. Alongside BYD, five other Chinese EV makers, including Changan, MG, GWM, and GAC Aion, are upping their presence in Thailand. These companies are expected to have a combined annual capacity of 700,000 to 800,000 vehicles once their Thai plants are fully operational.

Also last July, in Rayong, GAC Aion inaugurated a THB 2.3bn (USD 64mn) EV plant, its first in Thailand. Initially, the plant will have an annual production capacity of 50,000 units, which will eventually double. 

GAC Group Chairman Zeng Qinghong expressed ambitions to promote Thailand as “an EV industry centre in Southeast Asia”, echoing sentiments from Thai Industry Minister Pimphattra Wichaikul, who stated the country’s intention to become a regional manufacturing hub for electric vehicles in line with the government’s investment policy. Last April, GAC Aion announced plans for another EV factory in Indonesia.