Exclusive: Thailand’s EV Makers Seek to Renegotiate Government Incentives as Sales Slow

By Chayut Setboonsarng

BANGKOK – As electric vehicle sales fall short of expectations in Thailand, the country’s primary manufacturing group, which includes major Chinese and Japanese companies, is seeking to extend production deadlines under a government incentive program.

This initiative attracted over $1.44 billion in investments for new facilities from Chinese automakers, such as BYD Motors and Great Wall Motor, establishing Thailand as a regional leader in electric vehicle (EV) production.

However, with sales struggling — due in part to stricter loan conditions from Thai banks — the Electric Vehicle Association of Thailand (EVAT) is urging the government for additional time to achieve targets set by the main incentive scheme supporting the industry.

"We’re trying to negotiate, extend the production date a little," said Suroj Sangsnit, the president of EVAT and executive vice president of SAIC Motor-CP. "The conditions say we have to produce within a year; can we request another year?"

The EV 3.0 plan, as it is known, requires companies benefiting from tax breaks and other incentives to produce in Thailand this year the same number of vehicles they imported between 2022 and 2023. Missing this deadline would impose a greater challenge next year by requiring them to produce 1.5 vehicles for each imported unit.

Chinese firms such as BYD and MG Motor, owned by SAIC Motor Corp, along with Great Wall Motor, are pushing for this change.

Efforts to secure this concession are part of a broader strategy by the EV industry to address disappointing sales figures, which led them to meet earlier this year with officials from Thailand’s central bank.

Narit Therdsteerasukdi, secretary-general of the Thailand Board of Investment overseeing the incentive program, declined to offer a comment pending direction from the government of new Prime Minister Paetongtarn Shinawatra.

DEBT WOES

Thailand has historically been a focal point for automotive manufacturing and exports, significantly influenced by Japanese brands like Toyota and Honda, both of which are also part of EVAT.

The government’s incentives for EV production aim to convert 30% of the annual output of approximately 2 million vehicles to electric by 2030. However, new EV sales this year have reached only 43,000, falling short of EVAT’s target of 100,000.

These figures indicate broader challenges within the Thai automotive sector, where production declined by 17.28% in the first seven months of 2024 compared to the previous year, totaling 886,069 vehicles.

Banks have been reluctant to issue EV loans due to significant discounts affecting asset values, according to Suroj. "High household debt is tightening credit, making sales challenging," he noted.

Recent surveys show Thailand’s average household debt has reached new highs, exacerbated by slow economic growth, decreased incomes, and rising living costs.

During a meeting with the Bank of Thailand in June, details of which remain undisclosed, EVAT advocated for state banks to issue more auto loans. An outcome from that discussion indicated banks could assess income on a family or household basis when considering loans, according to vice president Siamnat Panassorn.

The central bank did not respond to requests for comment.