The Thai government is looking to entice global players to base their electric vehicle (EV) and hybrid manufacturing capacity in the country.
To do this, it has rolled out incentives last March including tax holidays of up to 8 years for production of hybrid EVs, plug-in electric vehicles (PHEVs) and battery electric vehicles (BEVs).
However, the push is facing some skepticism and fear within the local auto industry itself. Thai auto parts manufacturers have called for the government to delay its ambitious plans give the high stakes at play for the existing players.
Asking For Directions
The issue boils down to how auto parts manufacturers will be affected by the EV manufacturing push. At stake is the survival of a sub-sector that comprises about 2,500 companies with about 700,000 workers that support the local auto industry via parts manufacturing operations.
“The government is now speeding up its EV policy while the Thai Auto Parts Manufacturers Association (Tapma) is afraid that all the tier-2 and tier-3 makers would be wiped out, as EVs run on only 18 parts, while ICE-based vehicles need over 2,000 parts,” said Achana Limpaitoon, Tapma president.
The sizeable parts manufacturing sub-sector is the result of Thailand’s successful effort in the 1990s to establish itself as a car manufacturing hub. Today, the auto parts manufacturing industry counts 800 tier-1 firms plus another 1,700 tier-2 and tier-3 companies that support 18 Thai carmakers in producing 2.85 million vehicles today.
Tapma has called for a comprehensive roadmap for the existing auto industry, especially how locally made conventional models will be positioned in future amid a new landscape that promotes EVs.
Mapping the Future
Such a roadmap would be critical for the Thai auto industry. It would allow existing players to plan their transition and adjustment to a new landscape in addition to ensuring no one is left behind as the sector seeks to transform itself.
The clock is ticking to establish that roadmap. Already a number of auto companies have looked to Thailand for EV manufacturing — BMW is said to be weighing an EV battery factory there, while Japan’s FOMM Corporation is set to begin constructing a compact EV assembly plant this year.
The EV manufacturing push is not only for exports but also to promote local shift from conventional models to electrified alternatives. Thailand aims to have 1.2 million EVs on its roads by 2036 compared to just under 70,000 last year under its Energy Efficiency Plan (2015-2036).
Last August, state-owned oil and gas company PTT Ltd inked contracts with six automakers (BMW Group, Mercedes Benz, Mitsubishi Motors Corp, Nissan Motor, Porsche and Volvo) to develop EV infrastructure locally.
PTT will build a network of charging stations while the automakers pledge to develop EVs and promote awareness in the Thai market. This is part of the Thai government’s roadmap for electric vehicle and charging infrastructure (2014-2019).
Thailand is also seeing a new chapter in its sucessful auto sector history: the slow emergence of a local automaker. Vera Automotive, founded in late 2015, had unveiled its first EV in January. While Thailand’s first domestic car brand still has significant limitations, the road ahead can only be upwards for Vera Automotive.
To encourage local users to shift go electric, in 2016 Thailand reduced excise duty for eco-friendly vehicles emitting less than 100 grams of CO2 per kilometre from 17% to 12-14%. Those emitting over 200 grams per kilometre are charged up to 40% excise duty.
How successful its push for EV shift among both manufacturing and local usage is will be critical. The nation’s Alternative Energy Development Plan 2012-2021, which includes a renewable energy target of 25% of total energy consumption by 2021 (currently 8% as at December 2016), considers EVs as a critical component of this push.
ASEAN EV Summit
The latest updates from the nation’s EV push will be shared in the upcoming inaugural Asean Electric Vehicle Summit next week. The two-day conference is organised by the Electric Vehicle Association of the Philippines (EVAP) in collaboration with the Philippines Board of Investments (BoI) and Manila Electric Co. (Meralco).
Representing Thailand will be the Electric Vehicle Association of Thailand, who will present a country report alongside other countries in the region, namely Malaysia, Vietnam, Indonesia and the Philippines.