Is Thailand’s Automotive Prepped For All Electric Or Hybrids?
Thailand may have earned its position as the world’s largest automotive manufacturer. While it tries to gain in on electric vehicles (EV), the country has yet to strike a delicate balance between profitability and costs.
The Nation quoted Surapong Paisitpatnapong, Federation of Thai Industry’s (FTI) Deputy Chairman, who said that the export of fully assembled units in December rose 10.17 percent from the same month in 2021. During 2021, Thailand exported 1,000,256 completely built unit (CBU) vehicles, marking a 4.28 percent increase from the previous year, Surapong added. He said exports to Asia, Middle East, Africa, Central and South America showed a definite increase. However, he said, exporters were still suffering from a drop in the availability of shipping liners.
Costs Remain A Huge Concern
Despite declaring Thailand’s “success” in automotive exports, Surapong did not go into specifics. Given the world knows Thailand is a hot spot for electric vehicles, costs remain as a huge concern.
Tesla’s price reduction in January 2023 is a glaring sign that even what was once touted as a “luxury item” is not exempted from economic pressures. Reuters noted deep price cuts have positioned Tesla as the initiator of a price war, but its forecast of a 37 percent rise in car volume for the year, to 1.8 million vehicles, was down from 2022’s pace.
However, Musk remains hopeful that 2023 deliveries could hit 2 million vehicles, absent external disruption. Tesla’s sales prospects, as it confronts a weaker economy, are a key focus for investors. The company said it maintains a long-term target of a compounded 50 percent annual rise in sales.
It is getting some heat from Vietnam’s VinFast. Not to mention, EV titans from China are actively spreading their global presence. Even VinFast is expecting from competition from Chinese contenders.
Bloomberg pointed out Thailand has had a substantial supply chain for combustion engine cars. The challenge for Thailand is to have EV batteries made locally – Thailand’s Excise Department Director-General Ekniti Nitithanprapas stated that since battery is the most expensive component in an EV, the government will aim to set up EV battery supply chain locally to lower the selling price of EVs.
The Thai government approved considerable subsidies for EV and considered subsidising EV batteries to make EVs more affordable and to expedite shift to EVs.
Addressing The Cost Issue
On the supply side, the Excise Department said last October that it is mulling over subsidising battery production and recycling. According to the Bangkok Post, the Thai government might subsidise the whole process of production from sourcing raw materials to battery assembly or subsidise the battery end-products.
On the demand side, the Thai government approved nearly THB3 billion (US$81.4 million) of subsidies for retail EVs. Depending on the type and the retail price of the vehicle, carmakers are eligible for retail subsidies of THB18,000-150,000 (US$488-4,070), according to the Bangkok Post. The subsidy program is expected to kick in Q1 2023.
Large OEMs including Toyota, Nissan, BYD, Great Wall Motors (GWM), SAIC, Daimler, and more have begun producing EVs in Thailand. The Southeast Asian country’s goal for the EV shift is to reach 30 percent of production by 2030, which is around 600,000-700,000 units.
Nonetheless, it is clear that EV will not be immediately overtaking combustion engine at least from the costs perspective. This is in spite of many automakers simultaneously jumping into the EV bandwagon.
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