Thailand: Resuming plan to be an EV hub in ASEAN region after COVID-19 pandemic
Projecting output of 1.3-1.4 million units (down over 30%) in 2020, expecting car trade-in scheme
In March 2020, the Thai government announced a plan to develop Thailand as an EV production hub for the ASEAN region by 2025. The goal is to increase domestic EV production to 250,000 units by the same year, and to increase it to 750,000 units by 2030, or 30% of total vehicle output. By June 2020, the Board of Investment (BOI) of Thailand had approved five HV projects, six PHV projects, and 13 EV projects as production investments to which preferential treatments are applied. The government’s electrification program was suspended due to the COVID-19 pandemic, but the National Electric Vehicle Policy Committee resumed its activities in August 2020 to expedite its electrification program.
In 2019, Thai vehicle production fell 7.1% year-over-year (y/y) to 2.01 million units. By vehicle type, passenger cars and commercial vehicles fell 9.3% and 5.6% y/y, respectively. Sales in Thailand fell 3.3% y/y to 1.01 million units. The reduced sales are considered to be attributable to stricter scrutiny for auto loans by financial institutions. Exports fell 7.6% to 1.05 million units. Exports to the Middle East increased, while exports to Asia were flat and exports to Europe, North America and other regions declined. Production in January-July 2020, which was impacted by the COVID-19 outbreak, decreased 43.8% to 695,000 units, sales fell 35.9% y/y to 388,000 units, and exports dropped 37.7% y/y to 400,000 units.
The Federation of Thai Industries (FTI) forecasts 1.3-1.4 million units for production in 2020 (as of August 2020) as the lockdown has been eased and plants have resumed operations. Half of this is for domestic demand and the other half is for exports. It will take five years to return to pre-coronavirus levels. Even if it is possible to prevent further spread of the virus in Thailand, if the infection rate remains high in many countries or a second wave occurs, the global economy is expected to slow down and demand in Thailand and abroad will decrease.
The Thai government is planning to launch a car trade-in scheme and postpone the introduction of the Euro-5 emission standards to support the auto industry hit by the COVID-19 pandemic. The government is also considering delaying a plan to use gasohol E20, which contains 20% bioethanol blended with 80% gasoline, as the standard gasoline. In addition, the Eastern Economic Corridor (EEC), in which the automotive industry is also a target for investment, is preparing a tax incentive program for investors.
As for the activities related to the local production, Great Wall Motor acquired the plants of GM, which is withdrawing from the Thai market, and plans to start production in the first half of 2021. Nissan discontinued the production of three models and will focus on manufacturing subcompact cars, small MPVs and EVs.
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