The Thai government wants to consign the name "Detroit of the East" to history as it looks to diversify beyond conventional automobiles to build a regional electric vehicle (EV) hub.
The most difficult part of this plan does not lie in the know-how of developing EVs as they are no longer a cutting-edge concept. The challenging part will be ensuring the supporting factors needed to drive the change are in place.
EVs have become a considered choice for drivers in Europe, the US and China for several years. Europe last year saw promising growth in EV sales of 44% year-on-year. In 2019, China produced over 1.2 million EVs to serve the global market, and its producers act as original equipment manufacturers to other brands from many countries.
China has progressed on many fronts to support its EV industry. These include implementing policies and regulations that impose limits on carbon emissions, which spurs interest in non-polluting transport. It also provides the necessary infrastructure and conducts extensive scientific research to improve the efficiency of EVs.
Numerous EV brands have been developed in China at affordable prices and they have become a mainstream choice all over the country for both public transport and personal use.
If Thailand is to learn something from China, one of the first steps is regulations and policies that support and give consumers a convincing reason to convert from traditional vehicles to EVs.
From a production point of view, the government should offer clear benefits, such as special taxes and tariff rates to attract investors. In terms of infrastructure, the government will play an important role as it is not only about changing public buses or taxis into EVs, but facilitating adequate charging stations to support personal vehicles too.
The important factor that makes China the biggest EV manufacturer is local demand. Chinese EV brands are well-known in the local market and there is potential to expand their reach to other countries.
Great Wall Motors (GWM), a major car manufacturer in China, has seen the opportunity to broaden its business and announced a plan to set up a manufacturing plant in Rayong, with an expected completion date in early 2021. The Rayong site will be the 11th full-scale car manufacturing hub for GWM worldwide, supporting the production of various types of vehicles including EVs.
This new investment might be a starting point to build a new automotive supply chain in Thailand, as well as an expansion to contribute to related industries. This strategy could be described as the first step to creating a strong platform for further economic growth.
Natchaya Promsuwan is an analyst at Research and Consulting, CBRE Thailand. She can be reached at email@example.com