Tesla has become a powerful catalyst for Thai electric vehicle market after the company launched two EV models in the Thai market last week.
Some 4,000 Tesla cars were booked on the first day of the launch in Bangkok.
In the past, some Tesla cars have been spotted on roads in Thailand but most of them were imported by "grey market" operators and sold at high prices. Now, motorists can order Tesla's Model 3 and Model Y directly from Tesla Thailand at much cheaper prices.
The emergence of the Texas-based EV maker in the Thai market will be an important accelerator in the country's EVs market but development of the EV industry in Thailand still has many challenges ahead.
Thailand is one of the leaders in parts manufacturing for internal combustion engine (ICE) vehicles in Southeast Asia. The rising EV trend is reshaping the supply chain in the automotive industry.
Some auto parts manufacturers will face difficulties adapting their production methods from ICE vehicles to EVs with conventional vehicles consisting of 20,000-30,000 auto parts while EVs use only 2,000-3,000 auto parts. One key factor hindering the development of EVs is the unclear outlook for infrastructure, particularly charging stations.
The government has introduced an incentive package, which grants excise tax cuts and subsidies to promote EV production and consumption in 2022 and 2023. But incentives for EV infrastructure and ecosystem development are still lagging.
Customer concerns about the cost of EV batteries is another factor. Recently, an EV car was involved in a minor accident and part of its battery damaged, in a saga which went viral on social media.
The car company's dealer informed the owner that the cost of battery replacement would be as high as 600,000 baht and insurance would not cover all the cost. Still, the company clarified later that the 600,000 baht was an initial evaluation of the damage. In fact, the battery had no need to be replaced but its cover changed. Nevertheless, the issue reflects the high price of an EV battery which remains a key customer concern.
LiB Consulting, which researches the auto industry, has outlined scenarios of Thai battery EV development between now and 2030. It says Thailand will face a contrary situation because it is not a manufacturing base for battery-powered electric vehicles (BEVs) only. The lack of balance between manufacturing capabilities and consumer demand could reduce car production for export due to reduced ICE demand from abroad.
Thailand will still maintain its position as an ICE manufacturing hub as global demand for ICE and hybrid vehicles will persist due to insufficient BEV infrastructure. However, Thai businesses should acknowledge that exports may decline due to lower global demand.
Thailand will become a parts manufacturing hub specifically for domestic EVs, but the country will see a steep decline in exports as carmakers shift their export hubs to Indonesia, Vietnam or China to benefit from lower wages and greater availability of battery materials. Thailand will lose 40-50% of its automotive manufacturing market share, according to the Japanese business consultancy.
The EVs industry in Thailand needs clear strategic approaches from the government to develop an effective ecosystem and related infrastructure to accommodate the rise of EV demand and mitigate the impact on the ICE supply chain.