THAILAND REPORT
In Thailand, major Japanese and Chinese automakers are requesting government support for HVs and EVs. At a time when the growth of electric vehicles has slowed, Toyota Motor Corporation President Akio Toyoda visited Thailand and appealed to the prime minister for measures to promote hybrid vehicles. The Chinese are also demanding that the conditions for EV subsidies be relaxed, and they are lobbying hard for the largest automotive industry base in Southeast Asia.
According to a Thai government statement, Toyota’s chairman and the Thai prime minister discussed measures to promote Thailand’s automotive industry, including finished vehicles and parts suppliers. They discussed the promotion of hybrid vehicles, and the Prime Minister reportedly expressed a positive attitude toward government support.
According to the Federation of Thai Industries (FTI), cumulative new car sales in Thailand from January to November were 518,659 units, down 27% from the same period last year. While the overall market is struggling to grow due to stricter car loan screening, sales of EVs, which grew 7.8 times year-on-year to about 76,000 units in 2023, fell 5% year-on-year to 61,443 units in the January-November period of 2024. On the other hand, sales of HV increased 32% year on year to 105,434.
In terms of support measures, the plan was to increase the 6% excise tax on EVs by 2% every two years, but in July it was decided to keep it at 6%. However, there is a big difference in the preferential treatment, as EV purchase subsidies of up to US$2,900.86 (100,000 baht) will be provided from 2024 and the excise tax will be kept at 2%.
The Thai government plans for 30% of cars produced in the country to be EVs by 2030. However, a Japanese automotive executive said, “The Thai government has also realized that EVs are starting to fall into the ‘chasm’ (the gap before widespread adoption) and is looking for ways to make corrections to its course.”
Starting in 2022, subsidies for electric vehicles were provided, and this attracted more than 20 Chinese car brands to the market. These Chinese companies have also been increasing pressure on the Thai government since around the summer of 2024. Under the EV promotion policies, they receive subsidies, but they are also required to meet production obligations. They must increase the number of EVs they import in 2022-2023 to the same amount as the number of EVs imported in 2024, and then to 1.5 times that amount in 2025. However, due to the slowdown in the EV market, an increasing number of major Chinese automakers have been unable to meet their production quotas. Failure to do so will result in penalties, such as having to return subsidies received, so several companies have asked the government to relax the quotas.
In response, the government decided in early December 2024 to relax the EV production quotas. In addition to allowing production obligations to be carried forward to 2025 and beyond, the government is also expected to introduce a system that will allow the re-export of vehicles imported from China, reducing the number of vehicles imported in 2022-2023, which will be reflected in the production obligations.
Source: The Nikkei
PSR Analysis: As a market where the competition between EVs and HVs can be visualized, this news from Thailand is probably the easiest way to show the situation. At present, the scale of measures to promote EVs is larger than that of HVs, but Japanese brands still hold a 70% market share in Thailand, and if investment in HVs increases in the future, there is a possibility that measures to promote HVs will also be reviewed. And while it may be an ironic statement, it could also be said that this simply shows that it will be difficult to popularize both EVs and HVs without subsidies or promotional measures. While many people are predicting a challenging outlook for the Thai auto market in 2025 due to factors such as stricter credit screening, the government’s policies will have a major impact on the market. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
