Price gap remains a hurdle to Thais embracing EVs
While the government has already kicked off its electric vehicle (EV) promotion scheme to create environmentally-friendly buyers, Kasikorn Research Center forecasts the market will start expanding in earnest by 2025.
Pimonwan Mahujchariyawong, deputy managing director of K-Research, said the retail price gap between petrol engine cars and hybrid electric vehicles (HEVs) is more than 200,000 baht, rendering the latter unaffordable to mass buyers for now.
"EVs cannot approach local motorists who drive passenger cars with engines below 1,800cc, which now represent 40% of the total car market," Mrs Pimonwan said. "According to K-Research's survey, many Thai buyers still prefer to buy cars in the area of 400,000 baht, so HEVs, the cheapest EVs, are still too expensive for buyers."
Mrs Pimonwan cited findings from the survey -- due to changing trends worldwide, 62% of Thai motorists are interested in owning an EV, while 74% of those would prefer a plug-in hybrid electric vehicle (PHEV).
She said there were 85,495 EVs registered in Thailand as of July, mainly HEVs, while the number of PHEVs grew significantly from last year after luxury carmakers introduced such models locally.
EVs represent just 1% of all cars on Thai roads. But K-Research forecasts EV sales of 10,000 a year by 2022 after investors who were granted Board of Investment privileges begin construction of EV assembly lines, a development expected by 2020.
The BoI has set a deadline for HEV investment application submissions of Dec 29, while the deadline for application submissions for PHEVs and BEVs is the end of next year.
Thibodee Harnprasert, vice-president of the Society of Automotive Engineers Thailand, said the automotive sector is still worried about many negative factors that could affect the overall industry, including the impression that the government itself does not have a clear-cut policy.
"I'm not against the proliferation of EVs, but policymakers have not yet responded to concerns about supporting facilities for EVs such as charging stations, which are very few, and EV pricing in the second-hand market," Mr Thibodee said. "The impact to the country, meanwhile, includes a lack of used-battery management and insufficient power utilities to serve EV charging in the future."
He said a forthcoming hurdle is the free-trade agreement (FTA) that would bring imports of EVs from China tax-free, dealing a blow to local producers.
Under the Asean-China Free Trade Agreement, import tariffs on 703 items, including EVs, will be slashed from Jan 1, 2018.
Thailand's EV import duty sits at a high threshold of 80% with no free trade agreement in place, while Japanese EV makers are taxed at 20%, down from 40% before the Japan-Thailand Economic Partnership Agreement.
"China is one of the largest EV makers at the global level, so its production capacity can make a huge impact on Thailand," Mr Thibodee said.
He said that once Thailand has no stable policy governing the automotive sector, the existing manufacturing hub can be shifted to other Asean countries where the sector is growing quickly, such as Indonesia and Vietnam.