Auto market downturn? Are many automakers considering giving up Thai government subsidies?
Thailand
Electric vehicles
2024-12-10 09:22:45
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Chinese automakers are focused on globalization, but are overseas markets really a vast village for novices?
Thailand has always been regarded as a blue ocean market for electric vehicles, but overcapacity has become a foregone conclusion. After a nearly eight-fold year-on-year surge last year, the Thai electric market has fallen into a slump this year, with price involution and overcapacity beginning to emerge, which is not good news for Chinese manufacturers entering the local market.
The Electric Vehicle Association of Thailand (EVAT) said on December 6 that due to the continued downturn in the automotive industry, several electric vehicle manufacturers are considering giving up the country's electric vehicle Geely plan subsidies and adjusting their production plans.
As part of the long-term plan, Thailand first hopes to achieve the short-term plan, and the first step is to achieve the goal of 1.055 million electric vehicles in 2025. This includes 402,000 electric cars/pickup trucks, 622,000 electric motorcycles, and 31,000 electric buses/trucks.
To this end, Thailand has formulated a series of electric vehicle tax exemptions and vehicle subsidy policy packages. For different levels of pure electric models, Thailand has also successively given a series of tiered subsidy policies. At the same time, according to product types and pricing differences, different proportions of tariff exemptions are also given for complete vehicles and parts.
In the latest 3.0 plan, companies that require tax exemptions and other support must produce the same number of cars in Thailand this year as they import between 2022 and 2023. If they miss the deadline, their task next year will be even more difficult, as the plan requires them to produce 1.5 cars for every car they import.
To obtain lower consumption taxes and import tariffs, as well as subsidies, automakers must assemble electric vehicles locally in Thailand from this year and meet production targets set by the government.
Among the manufacturers that have already started or will start production in 2024, the total production capacity of six Chinese brands, including MG, Great Wall, BYD, Changan, and Aion, will reach 474,000 vehicles. By 2025, the production capacity of nine Chinese manufacturers investing in Thailand will exceed 620,000 vehicles.
This is far beyond the capacity of the Thai market. In other words, Chinese automakers will soon face overcapacity in Thailand.
In addition, due to slowing economic growth, reduced incomes and high living costs, Thailand's average household debt has risen to a record level, making it one of the highest in Asia.
High household debt is tightening credit, which will make electric vehicles difficult to sell. Therefore, many electric vehicle manufacturers are considering abandoning subsidies in Thailand's electric vehicle incentive program and adjusting production plans.
For Chinese companies going overseas, the situation is grim. They not only hope that the government will relax the requirements for electric vehicle manufacturing, but also lack confidence that subsidies can boost sales during the economic downturn.
At the same time, they must also be wary of counterattacks from Japanese automakers. Toyota, Honda, and Nissan have already made it clear to their supporting manufacturers that they will start to transform and produce new energy vehicles in Thailand within two to three years.
Please note that the overseas content involved in this article is compiled based on publicly available documents and reports from overseas and PandaGoGo’s past project experience. There may be inaccurate translations or policy updates, so the above content does not constitute any legal opinion from PandaGoGo.
Thailand has always been regarded as a blue ocean market for electric vehicles, but overcapacity has become a foregone conclusion. After a nearly eight-fold year-on-year surge last year, the Thai electric market has fallen into a slump this year, with price involution and overcapacity beginning to emerge, which is not good news for Chinese manufacturers entering the local market.
The Electric Vehicle Association of Thailand (EVAT) said on December 6 that due to the continued downturn in the automotive industry, several electric vehicle manufacturers are considering giving up the country's electric vehicle Geely plan subsidies and adjusting their production plans.
As part of the long-term plan, Thailand first hopes to achieve the short-term plan, and the first step is to achieve the goal of 1.055 million electric vehicles in 2025. This includes 402,000 electric cars/pickup trucks, 622,000 electric motorcycles, and 31,000 electric buses/trucks.
To this end, Thailand has formulated a series of electric vehicle tax exemptions and vehicle subsidy policy packages. For different levels of pure electric models, Thailand has also successively given a series of tiered subsidy policies. At the same time, according to product types and pricing differences, different proportions of tariff exemptions are also given for complete vehicles and parts.
In the latest 3.0 plan, companies that require tax exemptions and other support must produce the same number of cars in Thailand this year as they import between 2022 and 2023. If they miss the deadline, their task next year will be even more difficult, as the plan requires them to produce 1.5 cars for every car they import.
To obtain lower consumption taxes and import tariffs, as well as subsidies, automakers must assemble electric vehicles locally in Thailand from this year and meet production targets set by the government.
Among the manufacturers that have already started or will start production in 2024, the total production capacity of six Chinese brands, including MG, Great Wall, BYD, Changan, and Aion, will reach 474,000 vehicles. By 2025, the production capacity of nine Chinese manufacturers investing in Thailand will exceed 620,000 vehicles.
This is far beyond the capacity of the Thai market. In other words, Chinese automakers will soon face overcapacity in Thailand.
In addition, due to slowing economic growth, reduced incomes and high living costs, Thailand's average household debt has risen to a record level, making it one of the highest in Asia.
High household debt is tightening credit, which will make electric vehicles difficult to sell. Therefore, many electric vehicle manufacturers are considering abandoning subsidies in Thailand's electric vehicle incentive program and adjusting production plans.
For Chinese companies going overseas, the situation is grim. They not only hope that the government will relax the requirements for electric vehicle manufacturing, but also lack confidence that subsidies can boost sales during the economic downturn.
At the same time, they must also be wary of counterattacks from Japanese automakers. Toyota, Honda, and Nissan have already made it clear to their supporting manufacturers that they will start to transform and produce new energy vehicles in Thailand within two to three years.
The competition in Thailand is under great pressure.
Price war is imminent. The road to going overseas seems to be an opportunity, but risks are everywhere.
If the Thai government can relax its policies, it will relieve the pressure on the already sluggish Thai car market and avoid a new round of price wars for gasoline and electric vehicles.
It remains to be seen what the future policies will be! Welcome to continue to pay attention to Panda Going Overseas to learn more about Thailand's business policies!
For more details on companies going overseas, please consult PDAEXSEA professional consultants:
Please note that the overseas content involved in this article is compiled based on publicly available documents and reports from overseas and PandaGoGo’s past project experience. There may be inaccurate translations or policy updates, so the above content does not constitute any legal opinion from PandaGoGo.