Ten Thai automotive and auto parts associations have warned that EV adoption is putting pressure on domestic production and that the country’s automotive industry could face a crisis. According to the industry groups, Thai manufacturers are struggling to compete with low-cost, zero-tariff EV imports from China, while local parts suppliers are seeing orders decline.

The associations, which represent more than 1,500 member companies, said in a letter to the government that the industry could face a major shock in 2027, when the current incentive scheme designed to support EV production is scheduled to end. They called on the government to review the EV policy before the incentives expire and to introduce urgent measures to support the industry.

Their proposals include tax reforms to favor EVs produced in Thailand, linking import quotas with domestic production and technology transfer, strengthening local content requirements, promoting the use of Thai-made parts, improving access to raw materials, and tightening rules of origin and technology transfer requirements.

Under Thailand’s EV 3.5 scheme, manufacturers are required to produce two EVs locally for every EV imported in 2026, and three EVs locally for every EV imported in 2027. The Thai government has since adjusted the rules so that EVs produced in Thailand for export can also count toward these production requirements, in response to weak domestic demand and the risk of oversupply.

Source: Reuters / Automotive Logistics / Thailand Board of Investment

PSR Analysis: The issue is not simply that EV sales are increasing in Thailand. The more important point is that Thailand’s EV policy is moving from the demand-creation stage to a more difficult question: whether that demand can be absorbed into the domestic industrial base.

Thailand’s policy was designed to first build the EV market through imports and subsidies and then require manufacturers to localize production. That logic is clear. But if domestic demand remains weak while production obligations increase, manufacturers may end up producing EVs in Thailand without a sufficiently large local market to absorb them. That would raise the risk of oversupply, price competition, and lower plant utilization.

This is why the government’s decision to allow exported EVs to count toward production requirements matters. It suggests that Thailand’s EV strategy cannot rely on domestic sales alone. The next question is not just how many EVs are sold in Thailand, but where Thai-made EVs can be sold, and how much of that production can be linked to local parts, local capability, and technology transfer.

The pressure on existing suppliers is also more complicated than the familiar point that EVs use fewer parts than ICE vehicles. That is true, and ICE-related suppliers will inevitably face pressure. But the deeper issue is that if the EV market grows mainly through imports, higher sales volumes will not necessarily create more work for Thai suppliers. If batteries, motors, inverters, and electronic components remain largely imported, Thailand’s EV market can grow without significantly deepening the local supply chain.

In that sense, 2027 may become less of an incentive-expiry date and more of a sorting point for the Thai EV market. Manufacturers with scale, export channels, distribution networks, financing capacity, and battery sourcing strength will be better positioned. Brands that depend mainly on domestic sales, or cannot absorb the cost of local production, may come under pressure.

This matters for Japanese OEMs and suppliers as well. Thailand has long been the core ASEAN production base for Japanese automakers, but that position will not automatically carry over into the EV era. Japanese companies now need to decide how to reuse the production base they built around ICE vehicles in a market where the competitive rules are being rewritten by batteries, electronics, cost, and speed.

Thailand’s case also carries a wider lesson for Southeast Asia. Expanding EV sales and building an EV industry are not the same thing. Thailand’s ability to become an ASEAN EV hub will depend less on headline EV sales volume and more on whether EV demand can be converted into domestic production, exports, local sourcing, and technology transfer. PSR

Akihiro Komuro is Research Analyst, Far East and Southeast Asia, at Power Systems Research

India’s automotive industry is undergoing a significant fuel transition. While electric vehicles (EVs) remain a key pillar of decarbonization, biofuels—particularly ethanol and isobutanol—are emerging as critical tools for reducing oil imports, lowering emissions, and supporting domestic agriculture.

India has already achieved its E20 ethanol blending target ahead of schedule and is now preparing for higher blends such as E22, E25, E27, and E30. Recent policy measures, including the excise duty exemptions on higher ethanol blends and the expansion of ethanol retail infrastructure, indicate that the government intends to further increase ethanol consumption in the coming decade.

For vehicle manufacturers, ethanol offers opportunities and challenges. It improves energy security and lowers greenhouse gas emissions, but its lower energy density compared to petrol can affect fuel economy. As a result, OEMs are redesigning engines, fuel systems, and calibration strategies to support higher ethanol concentrations. Several manufacturers have already showcased flex-fuel vehicles capable of running on E85 or even E100, signaling the industry’s readiness for the next phase of ethanol adoption.

While ethanol is targeted at gasoline-powered vehicles, isobutanol is gaining attention as a potential blending component for diesel. Compared with ethanol, isobutanol offers higher energy density, better water tolerance, and improved compatibility with existing diesel infrastructure. Policymakers have recently indicated that an isobutanol-diesel blending framework could be introduced, creating a new decarbonization pathway for commercial vehicles, tractors, and off-highway equipment.

The significance of isobutanol lies in its potential to address segments where electrification remains challenging. Long-haul trucks, construction equipment, and agricultural machinery continue to rely heavily on diesel, and widespread electrification in these segments is likely to take longer due to cost and infrastructure constraints. Isobutanol could therefore serve as a practical transitional fuel while preserving existing engine and distribution networks. 

Source: Business Standard    Read the Article

PSR Analysis. India’s fuel transition is increasingly becoming a multi-technology story rather than an EV-only narrative. Ethanol is likely to become the primary decarbonization tool for petrol vehicles, while isobutanol could play a similar role in diesel applications. Over the next decade, the biggest beneficiaries are likely to be flex-fuel vehicle manufacturers, biofuel producers, and fuel-system suppliers. For the automotive industry, the most realistic pathway appears to be a combination of electrification, ethanol, and advanced biofuels—each serving different vehicle segments and use cases. PSR

Aditya Kondejkar is Research Analyst – South Asia Operations at Power Systems Research

Toyota is scraping its plans to launch a next-generation luxury EV, the Lexus LF-ZC electric sedan, which was expected to enter production later this year with advanced new batteries that would delivery significant range improvements, and a dedicated platform.

The model was planned to use the gigacasting production technique that would split the vehicle body into three parts, front, center, and rear, to cut costs.

On paper, this car would have been brilliant, but like many Toyota promises over the years, it’s not going into production. In model terms, Toyota promises much but delivers so little. Toyota is the latest Japanese automaker, following Honda and Nissan, to discontinue development of a major EV project, blaming changing market conditions.

Source: Electrek: Read The Article

PSR Analysis: While Japanese automakers continue to delay the inevitable shift to electric by cancelling projects, Toyota will likely fall even further behind Chinese brands, which own nearly every aspect of its supply chain.   PSR

Guy Youngs is Forecast & Adoption Lead at Power Systems Research

On one hand, EV vehicles have been the growth engine for the European Automotive industry (and also for the global automotive market) which has led to billions of Euros in investment, and on the other hand, the oil lobby and some legacy automotive manufacturers are pushing back against emissions legislation.

But if Europe holds its course on EV manufacturing — including all the related / supported components (batteries, power electronics, and critical components) it can rebuild its industrial base and secure growth and jobs.   PSR

Source: Clean Technica: Read The Article

PSR Analysis: The EU is once again proposing to revise its 2030–2035 car CO2, with the new Commission proposal weakening both the 2030 and 2035 targets, and the auto industry wants to reduce that ambition even more. The real danger here is while legacy automotive manufacturers would “buy” time to sort out their issues, the rest of the world (apart from the USA) is not standing still, and EU automotive manufacturers will find themselves further behind, with even less time to sort out their issues before bankruptcy looms. What this boils down to is that if EU does not embrace the EV revolution, they will lose out and the EU’s auto industry will enter a period of rapid decline / loss.   PSR

Guy Youngs is Forecast & Adoption Lead at Power Systems Research

The recent strategic announcements from Toyota and Maruti Suzuki mark the most significant supply-side shift in India’s auto sector in years. Both companies—already deeply linked through product sharing, technology exchange, and electrification strategies—are now doubling down on India as a long-term manufacturing hub.

Their parallel yet complementary decisions signal three major structural shifts: India’s rising importance in global automotive supply chains, the pivot toward future-ready platforms, and an attempt to stabilize costs amid global supply volatility.

Sources: Reuters  Read The Article    Read the Article

Toyota’s New Assembly Plants: Capacity + Localization Strategy
Toyota’s reported plan to set up three new assembly plants in Maharashtra is a bold capacity bet. For an OEM traditionally conservative in scaling Indian operations, this marks a new phase—one driven by three forces:

1. Localization of hybrid technology. Toyota’s hybrid portfolio is constrained by import dependence on high-value components. New plants provide room to deepen localization of motors, power electronics, and battery packs.
2. Export Hub Potential. Toyota globally is under margin pressure in developed markets. India’s low-cost base makes it ideal for exporting compact SUVs and MPVs to Southeast Asia, Africa, and Latin America.
3. De-risking from geopolitical supply shocks. Recent Middle-East disruptions have raised freight and input costs. Higher India localization reduces vulnerability to global shocks.

Maruti Suzuki’s ₹12,000+ crore Capacity Expansion: A Volume Play
Maruti Suzuki’s US$1.48 billion capex plan (₹12,000 crore) for new capacity is designed to reinforce its position as India’s small-car specialist while preparing for hybrid and flex-fuel transitions. Key structural drivers here are:

1. Small-car demand consolidation. Even though the small-car segment stagnates overall, Maruti still dominates >65% of this space. Additional capacity helps maintain cost leadership through economies of scale.
2. Hybrid and CNG scale-up. Maruti’s strategy is not pure EV. They are betting big on strong-hybrid, CNG, and future ethanol blends—segments where scale dramatically improves margins.
3. Shared product pipeline with Toyota. More capacity strengthens cross-badging economics for the two companies, reducing per-unit costs and enabling faster rollouts.

Industry-Level Impact: Why This Matters

1. Cost Structure Reset. More localization means lower import bills for batteries, motors, and electronics—eventually softening prices for hybrids and CNG cars.
2. Competitive Pressure on Hyundai-Kia, Tata Motors. Tata dominates EVs; Hyundai-Kia dominates SUVs. Toyota-Maruti’s capacity surge signals an aggressive comeback in hybrids and CNG SUVs.
3. Supplier Ecosystem Growth. Tier-1 and Tier-2 suppliers will see new opportunities in electronics, castings, plastics, and battery components.
4. Export Growth. If Toyota uses India as a regional export base, it lifts India’s status as a global automotive hub.

Bottom Line. Toyota’s capacity build and Maruti Suzuki’s mega investment are not routine expansions—they represent a strategic reset. Together, they are shaping India into a central node for hybrid, CNG, and next-generation compact vehicle manufacturing, with long-term repercussions for the domestic and global auto landscape. PSR

Aditya Kondejkar is Research Analyst – South Asia Operations for Power Systems Research

There seems to be a never ending cycle of oil-related problems. In 2008, supply, demand and speculation caused a massive price hike. In 2022, Russia invaded Ukraine causing another oil price hike. And now, the US-Israeli attack on Iran has driven yet another price hike. The fundamental problem is that transportation remains totally dependent on oil, and oil prices are set by a very volatile global market.

This whole problem has encouraged motorists to do the math, and the result is staggering. Motorists simply cannot afford not to buy an EV as their next vehicle. This article goes into the math behind this.

Source: Electrek: Read The Article

PSR Analysis: EVs cut across this problem, and it doesn’t impact them because electric prices are set nationally not by a very volatile global market and they are a fraction of gas prices. Electric prices are also a way out of oil dependence.      PSR

Guy Youngs is Forecast & Adoption Lead at Power Systems Research

Simultaneously, KTM’s corporate structure shifted as Stephan Reiff (formerly of BMW Motorrad) officially assumed the role of Chief Commercial Officer on April 1. On the community front, KTM confirmed that the 2026 KTM Europe Adventure Rally in Gubbio, Italy, has reached near-capacity registrations.

These developments signal a move away from the “overproduction” issues of 2025 toward a leaner, premium-focused strategy centered on Austrian-made electric innovation and high-margin “Orange Family” events.

Sources: Bajaj, AutoEvolution, KTM   Read The Article, Read The Article, Read The Article

PSR Analysis.  The stabilization of KTM through Bajaj’s $642.72$ million USD (€550 million) refinancing and the Mattighofen hub expansion is a critical “rescue story” for the European motorcycle industry. By localizing the production of high-performance electric components like the Freeride E’s drivetrain in Austria, KTM is positioning itself to benefit from the EU Industrial Accelerator Act’s “Made in EU” incentives.

For the broader industry, KTM’s aggressive pivot to a “premium-core” strategy—divesting from bicycles and non-core sports cars—highlights a trend of consolidation among European motorcycle manufacturers facing pressure from Asian imports.

The successful registration of the Adventure Rally also underscores the rising importance of “experiential retail”; for players like BMW and Triumph, the message is clear: survival in the 2026 market depends as much on building a gated community of riders as it does on the technical specs of the bikes.

The integration of Indian financial capital with Austrian engineering creates a formidable competitor. KTM now possesses the scale of Bajaj Auto for global sourcing and the high-end R&D capability of Mattighofen for the European premium market. This “hybrid” model allows KTM to weather economic volatility better than it did as a standalone entity in 2024.

As the Freeride E hits dealerships this month, it serves as a laboratory for the next generation of electric street bikes. If KTM can successfully migrate this technology to a “Duke E” or “SMC E” platform by 2027, it will likely dominate the urban European motorcycle segment, particularly as cities tighten noise and emission regulations. For your newsletter, the key takeaway is that KTM has successfully “right-sized” and is now the leading European edge for electric off-road technology.  PSR

Emiliano Marzoli is Manager of European Operations at Power Systems Research

Automakers and dealers indicate that a more significant recovery in vehicle demand will depend on a sustained downward trajectory in interest rates, improving affordability for both retail customers and fleet buyers. The current macroeconomic environment continues to constrain replacement cycles, particularly in higher-value segments such as heavy-duty vehicles and agricultural machinery, where financing plays a central role in purchase decisions.

Source: AutoData     Read The Article

PSR Analysis. The initial Selic reduction represents an important directional signal, but its isolated effect is insufficient to materially stimulate vehicle demand in the short term. The current environment suggests gradual recovery rather than an immediate rebound, with investment decisions remaining sensitive to credit availability and expectations regarding future rate trajectory. Sustained monetary easing will be required to support stronger fleet renewal dynamics and improve demand visibility across segments. It reinforces our forecast for the year on the on-road segments.  PSR

Fabio Ferraresi is Director, Business Development, South America, at Power Systems Research

Source: Autoesporte     Read The Article

PSR Analysis. GAC’s localization is in line with the structural shift in Brazil’s automotive market, with Chinese OEMs targeting the core profitability segments through aggressive pricing, high equipment levels and local CKD production. The company’s ambitious target of 50,000 vehicles per year signals intent to rapidly gain scale and directly pressure the traditional margin pool concentrated in compact and midsize SUVs. As ADAS, connectivity and electrification become baseline features, competition shifts toward cost efficiency and speed of portfolio adaptation. In a low-growth market, incumbents face simultaneous pressure on pricing and higher content requirements, reinforcing structural margin compression.   PSR

Fabio Ferraresi is Director, Business Development, South America, at Power Systems Research

Ashok Leyland’s move to develop and assemble its own battery packs marks one of its most strategically significant announcements in recent years. As India transitions toward a cleaner, multi-fuel commercial mobility ecosystem, this decision places the company at the center of the country’s electric commercial vehicle (ECV) transformation. The implications extend across technology, cost structure, competitive positioning, and long-term industry dominance.

At the core, battery packs account for 35–45% of an electric vehicle’s total cost, making them the single most influential factor in pricing and margins. By internalizing battery pack development, Ashok Leyland is aiming to break its dependence on third-party suppliers, reduce bill-of-materials cost, and secure tighter control over the EV value chain. This is crucial as global cell prices fluctuate and supply chains remain vulnerable to geopolitical shifts. In-house pack assembly gives the company cost stability, greater design flexibility, and freedom to optimize packs specifically for Indian duty cycles—ranging from stop-and-go urban e-buses to long-haul e-LCVs and future heavy-duty platforms.

Source: Ashok Leyland   Read The Article

The timing of this move is equally important. India’s e-bus demand is set to surge under government-led procurement models, while private fleet operators in logistics, e-commerce, and urban distribution are accelerating their shift to electric vehicles to reduce total cost of ownership.

With the ability to design and customize battery packs, Ashok Leyland can deliver superior range, enhanced thermal management, and higher safety standards—key parameters that fleet buyers evaluate while choosing OEM partners. This directly strengthens the company’s position against emerging EV-focused rivals as well as traditional competitors who are still dependent on external battery suppliers.

Furthermore, battery pack capability aligns with Ashok Leyland’s broader multi-fuel road map. The commercial vehicle market is evolving into a portfolio of fuels—CNG, LNG, electric, hydrogen ICE, and eventually hydrogen fuel cells. Among these, electrification will dominate the urban and medium-duty segments due to regulatory push, operational viability, and falling battery costs. Owning battery pack manufacturing ensures Ashok Leyland is structurally ready for this shift, while also enabling cross-application synergies for future hydrogen fuel-cell vehicles, which too require battery-buffering systems.

This decision also future-proofs supply-chain resilience. As global OEMs increasingly localize components in India to meet Production Linked Incentive (PLI) norms and reduce import dependence, Ashok Leyland’s move places it ahead of the localization curve. It enhances long-term scalability, protects margins, and positions the company as a technology-integrated OEM rather than a traditional vehicle assembler.

In summary, Ashok Leyland’s entry into battery pack manufacturing is far more than an operational development—it is a forward-looking strategic investment that strengthens technological depth, enhances cost competitiveness, and secures leadership in India’s fast-evolving electric CV landscape.  PSR

Aditya Kondejkar is Research Analyst – South Asia Operations for Power Systems Research