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Chinese EV manufacturers pour money into Thailand
Chinese EV manufacturers have shown interest in investing over $1.44 billion in the production of electric vehicles (EVs) in Thailand.
This comes as Thailand aims to have EVs make up 30% of all vehicles produced in the country by 2030.
Key Takeaways
- Chinese EV manufacturers are interested in investing over $1.44 billion in Thailand’s electric vehicle production, thanks to the government’s investment promotion.
- The arrival of Chinese EV manufacturers would boost the popularity of electric vehicles in Thailand, the second largest car market in ASEAN.
- Thailand has seen a significant increase in EV registrations, with 31,000 EVs registered in the first half of 2023, three times more than the entire year of 2022.
Chinese companies, GSC Aion New Energy Automobile and Svolt Energy Technology, have already committed large investments to EV production and battery production in Thailand. The Thai government has been actively promoting investments in the EV industry, offering incentives and benefits to investors from around the world.
The arrival of Chinese manufacturers would help boost the popularity of EVs in Thailand, which is the second largest car market in ASEAN. In the first half of 2023, 31,000 EVs were registered in Thailand, triple the number registered in all of 2022.
Chinese car manufacturers investing in EV manufacturing in Thailand include BYD Auto, Great Wall Motor, SAIC Motor and NETA Auto. During the first five months of 2023, Chinese companies have filed 93 applications for investment promotion with the BOI, worth a combined investment value of more than 31 billion baht.
Thailand as a production and distribution hub
More and more major Chinese EV players are targeting Thailand in the next EV push as they believe wooing foreign investors will remain the invariable policy of any government in Thailand.
GAC AION in April submitted an investment commitment letter to Thailand’s East Economic Corridor Policy Committee. The Chinese EV maker eyes the southeast Asian’s second economy as its first overseas base. Chang’an Auto also said it will invest 9.8 billion baht in a facility in Thailand to produce 100,000 electric vehicles annually, according to Thailand Business News.
Thailand is emerging as a key destination for Chinese electric vehicle (EV) manufacturers who are looking to expand their production and distribution networks in Southeast Asia. The country offers attractive incentives, a large domestic market, and a strategic location for accessing neighboring economies. In this blog post, we will explore the reasons behind the growing presence of Chinese EV makers in Thailand and the implications for the regional auto industry.
Why Thailand?
Thailand has long been a major hub for car manufacturing and exporting in Southeast Asia, with a well-established supply chain, skilled workforce, and supportive policies. The country is also one of the largest consumers of vehicles in the region, with a population of nearly 70 million people and a rising middle class.
To capitalize on these advantages, Thailand has been promoting the development of its EV industry, offering tax breaks, subsidies, and other incentives to attract foreign investors.
These factors have caught the attention of Chinese EV makers, who are facing increasing competition and regulatory pressures in their home market. By setting up production bases in Thailand, they can benefit from lower costs, easier access to raw materials and components, and preferential trade agreements with other ASEAN countries.
Who are the players?
Several major Chinese EV manufacturers have already established or announced plans to invest in Thailand, including:
- Great Wall Motor, which operates a plant in Rayong province that produces its Ora brand of EVs. The company also plans to build a battery factory and an R&D center in Thailand.
- BYD Co., which also has a plant in Rayong that produces EVs and batteries. The company aims to increase its production capacity and export its products to other Southeast Asian markets.
- Chongqing Changan Automobile, which intends to invest 10 billion baht ($290 million) to set up an EV production facility in Chonburi province. The company expects to start production in 2024 and sell its vehicles under the Kaicene brand.
- GAC Aion, which plans to invest 6.2 billion baht ($180 million) to build an EV plant in Chachoengsao province. The company targets to begin production in 2023 and launch its Aion V model in Thailand.
- Hozon New Energy Automobile, which will start production in Thailand to sell to Southeast Asia in 2024. The company will partner with a local firm, Yontrakit Group, to manufacture its Neta brand of EVs.
What are the challenges?
Despite the opportunities, Chinese EV makers also face some challenges in entering the Thai market, such as:
- Consumer preferences: Thai consumers are still largely unfamiliar with Chinese car brands and may have concerns about their quality, safety, and after-sales service. Chinese EV makers will need to invest in marketing, branding, and customer education to build trust and loyalty among local buyers.
- Infrastructure: Thailand’s EV charging infrastructure is still underdeveloped, with only about 2,000 charging stations across the country. This may limit the adoption and usage of EVs, especially outside major urban areas. Chinese EV makers will need to collaborate with the government and private sector to expand and improve the charging network.
- Competition: Thai consumers have many choices when it comes to buying cars, including from Japanese, Korean, American, and European automakers. Some of these rivals have also announced plans to produce or import EVs in Thailand, such as Toyota, Nissan, Hyundai, Ford, and BMW. Chinese EV makers will need to differentiate themselves from their competitors by offering innovative features, competitive prices, and superior service.
What are the implications?
The increasing investment by Chinese EV makers in Thailand is likely to have significant implications for the regional auto industry, such as:
- Boosting Thailand’s EV leadership: Thailand is already ahead of its neighbors in terms of EV production and adoption, and the presence of Chinese EV makers will further enhance its position as a regional leader. The country will benefit from more jobs, exports, technology transfer, and environmental benefits from the growth of its EV industry.
- Challenging Japan’s dominance: Japan has been the dominant player in Southeast Asia’s auto market for decades, with a strong reputation for quality and reliability. However, Japan has been slow to embrace EVs compared to China, which has become the world’s largest producer and consumer of EVs. As Chinese EV makers expand their presence in Thailand and other ASEAN countries, they may pose a serious threat to Japan’s market share and influence.
The arrival of Chinese EV makers in Thailand may also create new opportunities for collaboration and cooperation among different stakeholders, such as local suppliers, distributors, service providers, and regulators. By working together, they can overcome the challenges and maximize the potential of the EV industry in Thailand and beyond.
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