Chinese OEMs Step Up Investment in Thailand’s BEV Sector Leaving Japanese Manufacturers Behind

Investments by Chinese OEMs are heating up in Thailand in response to the preferential treatment for BEVs decided by the Thai government in February 2022. The preferential treatment will also provide benefits (purchase subsidies + tax incentives) to imported BEVs on the condition of future local production of vehicles and batteries. Great Wall Motor and MG (affiliated with SAIC Group) were the first to respond to this new opportunity and the BEV models of these two companies have already received preferential treatment, allowing their selling prices to be lowered. Plan for local production, which is a condition of preferential treatment, has also been announced. Great Wall Motor plans to start battery production from Q4 2023 and BEV production from Q1 2024 at its existing Rayong plant. It also plans to increase the annual production capacity of electric vehicles at the Rayong plant from 80,000 units to 120,000 units in the near future. MG plans to invest 2.5 billion THB to build a BEV battery factory and start production in 2023. BYD has not entered the Thai market as of September 2022 but intends to start operating a BEV and PHEV manufacturing plant in Rayong Province in 2024. Meanwhile, regarding Japanese OEMs, Toyota had applied for preferential treatment for the bZ4X BEV model and was approved in April 2022, but there is no word on investment in vehicle production. Chinese OEMs aim to ensure price competitiveness by taking the lead in establishing a system of “local production for local consumption,” including supply chains for batteries and other components. The entry price of Great Wall Motor's Ora Good Cat BEV model has been reduced to 763,000 THB after the application for preferential treatment. If local production of batteries, core parts and vehicles progresses, further price reductions will be a possibility. Southeast Asia has been a stronghold of Japanese OEMs. They may believe that it will take more time to develop the country’s charging infrastructure; however, it is not hard to imagine that the Thai government's impression of Chinese OEMs, which even showed investment plans in response to the government's request, is getting more favorable, which means that Japanese manufacturers can't afford to ignore this new development.