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Could Thailand Become the Next Electric Vehicle Powerhouse?

Several countries are rapidly developing their burgeoning electric vehicle (EV) industries to meet the growing demand for EVs and compete with China when it comes to manufacturing. Asia has come out on top in recent years for producing the cheapest EVs and batteries, even though some of the highest EV demand in the coming years is expected to come from Europe and North America. With the U.S. looking to decrease its dependency on China for renewable energy products, including EVs, automakers are looking to other Asian countries to develop their cars and batteries, with Thailand appearing increasingly attractive to investors. 

Thailand is rapidly becoming the EV capital of Southeast Asia, building on its already strong automobile manufacturing industry. It has been referred to as the "Detroit of Asia", gaining the title of the world's 12th largest automaker in 2018. Several foreign companies have launched operations in the Southeast Asian country, such as Japan's Toyota and Mitsubishi, as well as GM, Ford, Mercedes, and BMW. It provides a prime location for low-cost manufacturing, with a history of expertise in the sector. It is also ideal for companies looking to develop their export market beyond Europe and North America to Asia and Oceania.

Owing to its strong automaking reputation, Thailand has rapidly developed its EV manufacturing industry, supported by green funding from the Asian Development Bank (ADB). Last year, the Thai government launched a five-year investment promotion strategy to support the development of a green economy, focused on five strategic sectors including the EV supply chain. To spur investment, the government introduced a policy for "up to 13 years corporate income tax exemption without a cap", as we as other financial incentives. Toyota, BYD, Great Wall Motor, SAIC Motor, and Mercedes-Benz are just some of the companies looking to develop their EV segments in Thailand. 

In recent months, Tesla has shown greater interest in the Thai market. Elon Musk is looking for possible locations for his next Gigafactory and Thailand could well provide the answer. The Tesla CEO was expected to visit Thailand recently, before canceling the trip due to issues within the company. A move to Thailand could open a new regional consumer market for Tesla, as well as provide the potential for low-cost manufacturing. 

Craig Irwin, a senior research analyst at Roth Capital, explained, "Thailand is a possible path to China-like auto parts costs, allowing low-cost production." Irwin added, "Thailand is an option since it'll give continuity of access to the supply chain that supports the Shanghai facility, but not regulated by Beijing." This is key as the Biden administration recently introduced new restrictions on tax credits for foreign-produced EVs and EV components, which will make it more expensive for consumers to purchase Chinese EVs and EVs using Chinese batteries. 

In addition to American companies looking to alternative Asian markets, China itself is looking to expand its EV operations to other parts of Asia. In April, China's state-owned automaker Chery Automobile announced plans to develop a 50,000-unit per year battery and hybrid EV plant in Thailand following over two years of discussions. Operations are expected to commence in 2025, with output to be expanded to 80,000 units per year by 2028. 

The secretary-general of Thailand's Board of Investment (BOI), Narit Therdsteerasukdi, also met with executives from seven Chinese battery manufacturing firms, including Gotion High-tech, China Aviation Lithium Battery, and CATL, to discuss the potential for cell-level battery production in Thailand. The Southeast Asian country is attracting such great attention thanks to its historical ties with the automaking industry, as well as its favorable policies for EV production. Therdsteerasukdi stated, "I believe that in two years Thailand will have a large-scale battery cell factory. This will be another milestone to strengthen the supply chain and the long-term foundation of the electric vehicle industry in Thailand."

In terms of the domestic market, EV uptake in Thailand remains low but is expected to grow thanks to greater investments in manufacturing, charging infrastructure, and green public transport. The ADB is investing in renewable energy company Energy Absolute, which produces lithium-ion batteries for transport and power, and EV charging infrastructure for a range of EVs, including e-ferries, e-buses, and e-cars. ADB provided Energy Absolute with a $47.6-million green loan in 2021 to develop a wind energy project and expand Thailand's EV Charging Network by installing 3,600 charging stations across major cities. It also offered funding for the development of the E Smart Bangkok Mass Rapid Transit Electric Ferries Project - the first electric ferry fleet for mass rapid transport in the region, as well as the purchase of up to 1,200 electric buses

Building on its long-standing reputation as a major automaker, Thailand is rapidly becoming a big EV producer, with a manufacturing industry that is expected to expand further as the demand for EVs increases. Companies from across Asia, Europe, and North America are investing in EV manufacturing operations in Thailand thanks to its low-cost production, access to critical materials, and favorable EV policies. Further, as the U.S. will reduce tax credits for the purchase of Chinese EVs in the coming years, Thailand could become an attractive alternative for automakers.

By Felicity Bradstock for

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Felicity Bradstock

Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK. More