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Thai EV sales could jump 40% in 2025

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Production and subsidy conditions pushing EV sales -

association

president

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New supply and limited demand could intensify price war,

analysts say

By Chayut Setboonsarng

BANGKOK, Jan 31 - Thailand is bracing for an extended EV

price war triggered by a surge in local production from Chinese

car makers, a move likely to deal a further blow to a domestic

auto industry already struggling with tumbling sales, industry

experts said.

Electric vehicle sales in Thailand, Southeast Asia's largest

EV market, are forecast to jump 40% this year, exceeding 100,000

units and reversing a 8% drop in sales last year,

Suroj Sangsnit, president of Electric Vehicle Association of

Thailand (EVAT), told Reuters.

The expected surge in sales is largely because of a national

incentive programme that requires local production of 1.5

vehicles for each imported vehicle between 2022 and 2023 for

companies to qualify for tax breaks - and to avoid paying hefty

penalties.

The programme, which also includes price subsidies of up to

150,000 baht ($4,400), helped Southeast Asia's second-largest

economy become the region's biggest EV market, which registered

70,000 new EVs last year. It imported about 84,000 EVs between

2022 and 2023.

But it now threatens to intensify bruising price competition

in a weak market where auto sales are slumping because of tight

credit conditions and ballooning household debt, analysts said.

Great Wall Motor for January, dropped the price of its Ora

Good Cat as much as 270,000 baht, while GAC AION lopped 166,000

baht off the price tag of its AION Y Plus. Both are Chinese

companies.

"Price wars will be prolonged, aggressive, and more

widespread," said Siam Commercial Bank (SCB) Economic

Intelligence Unit senior analyst Tita Phekanonth, adding that

there also could be discounts for internal combustion engine

vehicles.

Thailand, a major auto production hub in Asia, exports about

three-fifths of locally manufactured vehicles.

The Board of Investment (BOI), which anchored the incentive

programme, changed some of the rules in December - extending a

battery production timeline and offering incentives for hybrids

- to ease concerns of oversupply and a price war.

BOI chief Narit Therdsteerasukdi told Reuters that EV

companies would start exporting this year as well, potentially

easing oversupply.

"They are not restricted to right or left-hand drive

either," he said, pointing out that Chinese carmakers were

producing both EV variants in Thailand.

"Other markets like Indonesia have also seen investment from

(China's) BYD and Neta," said Hathaiwal Tungkaterakul, a senior

researcher at Kasikornbank, and those companies' EV exports

compete with Thailand's.

Thai auto production dropped for the 17th consecutive month

in December because of weak demand at home and abroad. Vehicle

exports fell 8.8% in 2024, while domestic sales plunged 26%, the

lowest in 15 years.

OVERSUPPLY CONCERN

Drawn by subsidies and tax incentives aimed at converting

30% of its annual auto production to EVs by 2030, Thailand,

whose auto sector had long been dominated by Japanese firms, has

seen a flurry of Chinese EV investment in recent years.

China's BYD, Great Wall Motor and

others have poured more than 102.7 billion baht ($3 billion)

into the country, according to EVAT.

BYD, Great Wall Motor, Changan and GAC AION, which launched

their facilities in Thailand last year, did not respond to a

Reuters request for comment on their strategies ahead of

potential EV price cuts.

Carmakers failing to meet the local production requirements

could face up to 400,000 baht ($11,806) per car in penalties and

fees, said EVAT's Suroj, who is also the executive vice

president of SAIC Motor-CP, a joint venture of China's SAIC

Motor and Thailand's CP Group.

"It will be competitive," said Suroj, adding that locally

produced vehicles will only qualify for subsidies if they are

sold this year, after which government support will cease.

BYD has already come under government scrutiny for deep

discounts of up to 340,000 baht per EV. The biggest EV seller in

the country was cleared of wrongdoing by a consumer watchdog

last year.

($1 = 33.6600 baht)