Blue skies: mapping Thailand's EV transition
'Unhealthy" is a common term used to describe the glittering capital city of Thailand. In 2019, Bangkok recorded extra high levels of fine particulate matter (PM2.5) above what the World Health Organization considers acceptable, causing over 9,000 deaths and 112 billion baht in economic losses from sick leave, healthcare and medical issues.
These days, blue skies are common as the pandemic has limited business activity, transport and travel. However, once semi-normal kicks in, vehicle ownership and traffic is expected to spike again.
And, in no time, Thailand will face another urgent need to alleviate pollution -- similar to many cities in Asia, where manufacturing industries from around the world are concentrated. In fact, 92% of the population in Asia and the Pacific -- about 4 billion people -- are exposed to levels of air pollution that pose a significant risk to their health, the Climate and Clean Air Coalition has said.
Amid growing awareness about climate change, health and sustainability, the demand for electric vehicles has risen. Thailand, as the 11th biggest car manufacturer in the world, cannot afford to be left behind.
Electrification is the biggest disruption to the automotive industry in decades. It is challenging industry norms from consumer demand through to manufacturing operations and even sales models; at the same time, automotive design has been evolving and becoming increasingly complex since it requires the integration of mechanical, electrical, electronic and communications systems to come together.
But less than 1% of all of Thailand's vehicles on the road are electric -- partly because EVs are still more expensive than ICE vehicles, which presents a barrier for entry for many.
And here's where Thailand faces a delicate balance. On one hand, automotive industry contributes about 10% of the country's US$545-billion gross domestic product. However, as a signatory to the Paris Accords, there is now a push for Thailand to take its EV sector -- which is still in its infancy -- to the forefront.
What will it take to accelerate Thailand's EV sector? And, as a country that exports half the vehicles it makes, how might Thailand lead the way for the rest of the region?
Continuous government support for cutting-edge technology and capital investment to attract EV production-related companies and suppliers cannot be understated, nor can the importance of government policies that will bring about a mindset change about EVs, such as incentives and cost-reduction.
Thankfully, Thailand is serious about moving into the EV sector.
The recently announced National Electric Vehicle Policy aims to transform Thailand into a low-carbon society by having EVs make up at least 30% of total domestic vehicle production by 2030 -- that would work out to 725,000 electric passenger cars and pickup trucks and 675,000 electric motorcycles.
It also aims to only sell zero-emission vehicles from 2035, so as to make Thailand the Southeast Asian hub for the production of conventional autos to one making electric cars.
There are also plans to build 12,000 public fast-charging stations by that time. To promote the use of EVs, tax and non-tax incentives for manufacturers and consumers are being considered.
The Board of Investment recently reported that EV manufacturing and related infrastructure drew in investments of 79 billion baht between 2017 and 2019, and this figure is set to grow even more over the next three years.
While automobile suppliers abound, and most of the parts can be procured locally, Thailand, like Europe and Japan, has a large ICE production base, so it will be difficult to make a dramatic change to EVs. Therefore, it is necessary to attract emerging EV manufacturers from the US and China to motivate buyers as well.
The road ahead will be challenging, as electric and autonomous vehicles represent a completely new paradigm, requiring some fundamental shifts when we think of vehicle design.
EVs produce less than half the emissions of ICE vehicles over their lifetime, and have proven to directly alleviate air pollution levels. However, electricity has its own set of complexities, and there has to be a serious effort to address the need for renewable energy.
Without that effort, there is a risk that the carbon footprint of manufacturing EVs could increase in parallel with the decarbonisation of transport. We could end up with cleaner streets at the expense of more carbon-intensive supply chains. As such, the shift to renewable energy is the key to addressing the environmental impact of batteries, for example. The source of energy should not be, as it is now, from a non-renewable source. Already we see a big move toward renewable energy as the source for charging infrastructure, and also for manufacturing of EVs. There are also concerns with the production and sourcing of rare earth material for EV batteries.
To this, we at Hexagon believe technology is the answer. In fact, batteries have seen the biggest increase in investment of any EV technology. More than 60% of industry respondents believe breakthrough battery technology will play an important role in enabling electrification.
With the right policies, there are many ways to make that transition from ICE to EV; and it begins by moving beyond just "ICE versus electric", and to think about the entire energy infrastructure of EVs, from production processes to materials and product life cycle.
Ultimately, Thailand's decisions on the automotive industry will certainly be felt not just domestically, but globally. And while the road ahead will be challenging, it could also be one that will be rewarding -- for the people, and for the planet.
Yuji Nagano is business development manager and deputy country manager with Hexagon Manufacturing Intelligence, Thailand.