The Thai government says it will relax the requirement for EV manufacturers receiving subsidies to produce a certain number of vehicles by 2024. There had been calls for a revision from Chinese manufacturers and others. This is in response to poor market conditions for EVs.
The Board of Investment (BOI) of Thailand provides subsidies to manufacturers that can be applied to the purchase of EVs. The subsidy amount is up to about US$ 3,000 (100,000 baht or about 440,000 yen) per vehicle, which is about 10% of the purchase price of a medium-sized SUV.
Most of the subsidies have already been paid to the manufacturers. The manufacturers that received the subsidies were required to produce a certain number of vehicles in Thailand by 2024, and they were required to produce the same number of vehicles that they exported and sold in Thailand in the two years from 2022 to 2023. If they failed to meet this target, they would be subject to penalties.
Due to factors such as stricter car loans, sales of EVs have been slow recently. The BOI has changed its policy to allow production to continue until 2025. However, in order to receive the 2025 subsidy, the 2024 production target must be met.
Until around 2023, imported EVs were the norm in Thailand. The government has begun implementing measures to support manufacturers to encourage production in Thailand. Companies such as China’s BYD and Great Wall Motor had already started production in the country.
Source: The Nikkei
PSR Analysis: This news does not mean that it will be easier for Chinese EV manufacturers operating in Thailand. To take advantage of the EV shift and develop their own domestic automotive industry, Thailand and other countries in Southeast Asia have been improving their EV-related subsidies and support systems. However, the effects of the global EV market slowdown are also being felt here.
We can expect to see a review of such schemes in other countries as well. Chinese manufacturers will be particularly affected. Chinese manufacturers operating in Thailand and Indonesia are all BEV-focused companies. This news is about a change in the system to support the activities of companies that have expanded into the region, but if the EV market slows further, there is a possibility that the supply and demand balance will collapse, leading to overproduction.
In fact, there are many overproduced BEVs sitting idle in mainland China. Southeast Asia does not want this situation to happen again. If the subsidy system is fundamentally revised, it is possible that the position of Chinese brands in the Southeast Asian auto market will change significantly. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
