Taking a closer look at the EV expansion

Taking a closer look at the EV expansion

EXPLAINER: Sales are climbing in Thailand thanks to incentives and state campaigns, though the sector is in the early stages

An electric vehicle recharges at a charging station. Thailand's government has launched three packages to stimulate production and consumption of EVs.
An electric vehicle recharges at a charging station. Thailand's government has launched three packages to stimulate production and consumption of EVs.

Domestic sales of battery electric vehicles (BEVs) skyrocketed last year by 603% year-on-year to 73,568 units, with the trend expected to continue this year, according to the Federation of Thai Industries (FTI).

The growth trend of BEVs is likely to outpace that of internal combustion engine (ICE) vehicles, which reported a sales decline of 13.7% year-on-year to 238,570 units in 2023, commanding a 30.7% market share in the passenger car segment. In contrast, BEVs posted a 9.4% market share in the segment.

Promising EV sales are drawing more investment from car and tech developers, even as Apple Inc recently announced it is cancelling its decade-long effort to produce EVs.

The Explainer explores what is behind the growth of the EV market in Thailand and looks at factors that may slow production.

Q: What is driving EV sales growth?

The state EV incentive packages play a key role in making EV prices more affordable, boosting the demand for EVs, said Surapong Paisitpatanapong, vice-chairman of the FTI and spokesman for its Automotive Industry Club.

The government has launched three packages to stimulate production and consumption of EVs.

Last month, the National Electric Vehicle Policy Committee approved incentives to motivate companies to transition their commercial fleets of large trucks and buses to BEVs.

Mr Surapong says state incentive packages play a key role in making EV prices more affordable.

Incentives for using electric buses and trucks include a tax deduction granted to eligible companies, effective until Dec 31, 2025.

The committee also endorsed cash grants for EV battery cell manufacturers.

The EV3.5 and EV3.0 schemes previously launched by the government are also driving the growth of the Thai EV industry, said Mr Surapong.

In November last year, the committee approved EV3.5, which is the second phase of the EV incentive package dubbed EV3.0.

EV3.5, running from 2024 to 2027, consists of subsidies worth between 5,000 to 100,000 baht for imported electric cars and motorcycles. Import duties and excise tax are also reduced.

EV manufacturers participating in EV3.5 are required to produce EVs domestically from 2026.

During the Prayut Chan-o-cha administration, the committee approved EV3.0, which includes tax cuts and subsidies to promote EV consumption and production between 2022 and 2023.

The subsidies range from 70,000 baht to 150,000 baht depending on the type and model of vehicle, with lower excise tax and import duties on completely knocked-down and completely built-up units.

Participating car companies are committed to producing EVs in Thailand starting from 2024.

"The incentives, together with economic sentiment in Thailand, will build confidence among prospective car buyers, encouraging them to buy EVs," he said.

If the prices of BEVs, especially imports, are between 600,000 and 1 million baht, more people will buy the cars, said Mr Surapong.

"BEV sales may total 100,000 units this year or even reach 150,000 if prices in the city car category are lower than 600,000 baht," he said.

Krisda Utamote, president of the Electric Vehicle Association of Thailand (EVAT), said the rapid growth of the EV market can also be attributed to expensive oil prices as well as technological and environmental issues.

The impact of geopolitical conflicts can drive up oil prices, while quick technological changes are pushing people to try new cars, he said.

BEVs can help Thailand reduce carbon dioxide emissions and PM2.5 ultra-fine dust that plagues the country annually, said Mr Krisda.

Q: Will more EV production in Thailand lead to a glut?

Mr Surapong said he does not believe Thailand will be flooded with a surplus of EVs, which would cause EV makers to eventually reduce production.

In January this year, BEV sales in the country represented 17.8% of total car sales, according to the Automotive Industry Club.

Authorities want the sales totals for BEVs to increase, as ICE cars increase levels of carbon dioxide in the transport sector.

The government set a goal for BEVs to comprise 30% of total car manufacturing by 2030, producing 725,000 zero-emission cars, 675,000 electric motorcycles and 34,000 electric buses and trucks.

Mr Surapong said he does not believe the limited number of EV charging outlets, especially in public places, will affect EV sales and production.

With growing demand for EVs, charging facility developers and operators are expected to increase the numbers, making chargers more publicly available, he said.

There were 4,985 EV charging outlets nationwide last year, according to an estimate by EVAT.

Sharge Management Co, a provider of charging systems for battery-powered vehicles, said earlier the EV industry requires investment of more than 2 billion baht for charging facility development between 2023 and 2030, increasing the number of chargers to 7,000 to serve the increasing number of EVs.

Q: What happened to Apple's EV project?

Apple plans to shift employees working on the EV project to the artificial intelligence division, according to a Bloomberg News report, citing people with knowledge of the matter.

The decision came as many EV makers, especially car companies in China, announced or are considering more investment in EV assembly and battery manufacturing.

Apple's move to wind down the project is a bombshell for the company, ending a multi-billion-dollar effort called Project Titan that would have vaulted Apple into a whole new industry, said Bloomberg.

Apple also faced a cooling market for EVs in the US. Sales growth lost steam in recent months after high prices and a lack of charging infrastructure discouraged mainstream buyers from shifting to BEVs.

General Motors Co and Ford are pivoting to producing more hybrid vehicles after confronting lacklustre EV demand and manufacturing bottlenecks.

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