Thailand’s Board of Investment in July approved a THB 7 billion, approximately USD 210 million, investment by AutoAlliance Thailand (AAT). The joint venture between Mazda Motor and Ford Motor will upgrade its existing production facilities, mainly for Mazda vehicles, in preparation for a B-segment SUV using mild hybrid electric vehicle technology.
The investment will introduce additional automation and robotic equipment in chassis welding, body assembly, painting and final assembly. The upgrades are intended to improve production efficiency and accuracy while allowing the plant to handle the additional components and manufacturing requirements of the new MHEV model.
Mazda announced a broader investment plan in February 2025 to develop Thailand as a production base for electrified compact SUVs. The company said the vehicles would be supplied to the Thai market and exported to Japan and other ASEAN countries, with annual production targeted at 100,000 units.
Mazda currently operates the AutoAlliance vehicle plant in Rayong and Mazda Powertrain Manufacturing Thailand in Chonburi. The latter produces engines and automatic transmissions. The company’s investment plan also covers powertrain and battery-related production, although the configuration of the MHEV system, the detailed configuration of the MHEV system has not been disclosed. But Mazda has previously indicated that production will begin in 2027, with annual capacity of 100,000 units and a local content target of more than 70%.
Thailand continues to support several types of electrified vehicles rather than focusing only on battery-electric models. The country has attracted investment in BEV, HEV and related component production, while retaining a large existing supply base for engines, transmissions and other conventional vehicle components.
Sources: Reuters / Thailand Board of Investment
PSR Analysis: The investment shows that Thailand’s automotive strategy is not based on a single powertrain technology. The country is developing production capacity for ICE, MHEV, HEV, PHEV and BEV models at the same time. This is relevant in Southeast Asia, where income levels, fuel prices, electricity supply, charging infrastructure and vehicle usage vary considerably between markets.
MHEVs continue to use an internal combustion engine as the main source of power, allowing manufacturers to retain much of the existing engine, transmission, fuel and exhaust supply chain. At the same time, the vehicles require batteries, starter-generators, inverters and additional power-control components. This provides a route for existing Thai suppliers to add new products without requiring an immediate replacement of their existing manufacturing capabilities.
The focus on upgrading an existing plant is also important. Auto Alliance is investing in welding, body, paint and assembly automation rather than building an entirely new factory. This reflects the need for Thai vehicle production to compete through quality, accuracy, utilization and manufacturing flexibility, rather than labor cost alone.
Japanese and Chinese manufacturers are taking different approaches in Thailand. Chinese investment has concentrated heavily on new BEV capacity, while Japanese manufacturers are making greater use of existing plants, local suppliers, export networks and powertrain production. Both groups are likely to compete for the Thai market and for exports, but with different product and manufacturing strategies.
The main point to watch will be the local sourcing of the MHEV system. If batteries, starter-generators and power electronics continue to be imported, much of the additional value will remain outside Thailand. If production of these components is localized, the Auto Alliance investment could support a broader upgrading of the country’s automotive supply chain. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
