The widespread success of BYD in Thailand has incited a flurry of Chinese electric vehicle (EV) manufacturers to break into the Thai market.
On Tuesday, July 4, the Thailand Board of Investment (BOI) revealed that Chinese EV manufacturer Chery plans to venture into the Thai market in early 2024. The company views Thailand as a strategic investment location for setting up production bases and plans to introduce the Omoda 5 electric SUV to the Thai market.
Narit Therdsteerasukdi, Secretary-General of the BOI, announced on Tuesday that Chery is in discussions with potential partners to consider suitable investment models in Thailand. The BOI engaged in dialogue with Chery and Changan Auto at an investment roadshow from June 28-30.
Therdsteerasukdi also stated that Changan Auto's plans to establish an EV factory in Thailand are awaiting approval from the Chinese side. The first phase of the investment is projected to be $260 million.
Thailand is a significant market in the global landscape of Chinese car exports. This year, not only Chery and Changan, but several other Chinese car manufacturers including BYD, SAIC, and Ideal have expanded investment in Thailand or established new factories, aiming for localized car production.
In March, BYD laid the foundation for a production factory in Rayong, a crucial automotive production and export base in Thailand. Production is expected to start in 2024. Following this, Changan Auto announced in April a $285 million investment to build a factory in Thailand, producing its first right-hand-drive car outside China. In April, SAIC Group announced plans to construct a new energy vehicle industrial park in Thailand. In May, a government spokesperson in Thailand stated that Ideal has signed an agreement with a Thai car assembly company to start local production of the Nezha V model from next year.
Analysts from the Detroit consulting firm Sino Auto Insights believe that due to factors such as the maturing domestic market and intensified competition, the cost for Chinese car manufacturers to acquire new customers has become exceedingly high. Furthermore, the price war between car brands at the beginning of the year has led many car manufacturers to view overseas expansion as a more reliable growth strategy.
So, why have Chinese EV manufacturers chosen Thailand?
The choice is not only because Chinese car brands are well-received locally, but Thailand also has a mature auto industry and a demand for EVs.
The fact that BYD is "selling like hotcakes" in Thailand is a testament to the acceptance of Chinese EVs by the Thai people. In October of last year, BYD introduced the ATTO 3 EV to the Thai market for the first time, and sales began in November. As of the end of March 2023, 3,000 ATTO 3s had been registered in Thailand, accounting for nearly 10% of the country's total EV registrations. Reports from People's Daily indicate that when BYD started its factory in Rayong, the company had delivered more than 10,000 ATTO 3 models in Thailand. Scenes of consumers queuing to order BYD cars are no longer news in Thailand.
It's worth noting that BYD's recognition among Thai consumers is closely tied to the company's years of groundwork in Thailand. BYD began delivering its first batch of pure electric taxis to Thailand in 2018, and over the years, its business in Thailand has expanded to include electric forklifts, electric buses, and other areas.
Thailand is the second-largest economy in Southeast Asia, and since 2008, it has aimed to become the "Detroit of the East" through the development of its auto industry. By imposing high tariffs on imported cars and offering tax relief for domestically produced cars, Thailand has attracted manufacturers to invest in the supply chain, forming a robust industry support network. However, Thailand's auto industry has long been dominated by Japanese manufacturers, and up until now, production has been mainly concentrated in the gasoline vehicle sector.
In recent years, Thailand's auto industry has started to focus on electrification. In 2021, the Thai government set a policy goal that by 2030, 30% of domestically produced cars will be zero-emission vehicles, and by 2035, zero-emission vehicles will reach 1.35 million.
Aside from EV manufacturers, the Thai government is also attracting battery manufacturers to build factories locally, aiming to become a major global production and supply base for EVs and their components. On May 3, Thailand stated it was in talks with Chinese new energy vehicle battery manufacturer CATL and other battery manufacturers.
Chinese car manufacturers building factories in Thailand are not only serving the local market but are also using this as a base to radiate across the entire Southeast Asian region. Last year, car sales in the region increased by 23%, reaching 3.4 million vehicles.
Some analysts believe that regardless of whether the plans of Chinese car companies in Thailand succeed, these investments have strengthened China's already dominant position in the Asian supply chain. Last year, Thailand received $3.4 billion in foreign direct investment from Chinese companies, more than it received from the US or Japan.
