Thailand’s auto industry faces tough times, but electric vehicles provide hope

Thailand is a regional manufacturing hub, mainly for Japanese gas-powered cars and pick-up trucks. The country is sometimes called the Detroit of Southeast Asia. 

But times are tough, at least for those who work making gas-powered cars.

“Business is bad now,” said motorcycle taxi driver Nadtapol Baolophet, who lives near a cluster of auto factories and suppliers in eastern Thailand. “A lot of people have lost their jobs. Factories have closed down. It started during COVID when electric vehicles came in. Suppliers for gas-powered cars started to close down.”

Overall vehicle production dropped by 20% in the first 11 months of last year compared to the previous year. Japanese carmaker Subaru ceased production in Thailand in 2024 due to poor sales, and Suzuki will follow suit in this year. Thailand’s weak economy means banks are tightening the criteria for car loans and fewer consumers are buying new cars.

However, sales of electric vehicles are holding up better than those of gas vehicles. Thailand is betting on EV manufacturing. Of more than a million vehicles produced in the country in the first 10 months of last year, 170,000 were electric or hybrid.

The government has a policy that by 2030, 30% of all vehicles manufactured in Thailand will be electric. To meet that goal, it needs help from a country with an advanced EV industry: China.

“You can see that Thailand goes all out in pursuing the Chinese investor,” said Pavida Pananond, a professor of international business at Thammasat University in Bangkok.

She said the Thai government not only offers EV makers tax incentives to set up factories and subsidizes prices to make EVs affordable for consumers, but it also reduces rates of excise taxes and tariffs for imported EVs.

Chinese EV makers have an advantage over competitors. Under an existing free trade agreement between China and 10 Southeast Asian countries, Chinese cars can be imported without tariffs to sell to the Thai market.

In return, Thailand requires EV firms to eventually manufacture more cars locally than they import. EV brands were expected to manufacture one EV for every one vehicle they imported in 2024. However, EV makers missed the production target because of weak sales. The Thai government agreed to extend the deadline last month.

China’s EV makers have invested over $1.4 billion in Thailand over the last couple of years. Chinese giant BYD unveiled a sprawling factory last year in Rayong province. The firm and other Chinese EV makers are keen to find more markets since their cars face 100% tariffs in the United States and Canada, effectively shutting them out.

BYD Thailand turned down Marketplace’s interview request. But the firm projected it would generate 10,000 jobs.

Several BYD workers near the factory who spoke to Marketplace had never worked in the auto industry before. They said they joined because the company seemed “trendy.”

Sutthilak Natthit left his hotel gig and joined BYD as an assembly worker a few months ago. “BYD is a factory producing a new product, and I see opportunities,” he said.

Suchada Nilprakhon was working at the Pandora jewelry factory before she joined BYD to do plastic injection molding.

“At the time, Pandora was downsizing and offering voluntary redundancy. So I took it and went to BYD because the job seemed more stable,” she said.

She said BYD pays a bit more than her previous factory job — roughly 15,000 Thai baht a month, or $400, though she must work six days a week instead of five. 

In Chonburi province, China’s state-owned carmaker SAIC and Thai conglomerate CP jointly own a factory manufacturing mainly the gas-powered MG Motor brand. The factory started producing an electric model and batteries in 2023. MG Thailand turned down Marketplace’s interview request.

In a nearby town, strips of Chinese restaurants and massage shops have popped up. Some local Thai businesses are concerned that Chinese investment won’t trickle down to the wider Thai economy.

“These days, I see Chinese people renting shops to do business. Their staff is Chinese, the customers are Chinese. But Chinese people wouldn’t come to shops, say, like ours and buy motorcycles,” said Chairat Suwanpayak, the branch manager at a motorcycle dealership selling Hondas.

Something similar could happen in EV manufacturing, according to Pananond, the business professor.

“Chinese companies can also set up their own suppliers and then import parts in here without really creating the supply chain that the Japanese have helped created in Thailand,” she said.

The Thai government requires EV makers to source 40% of car parts locally.

However, EV makers have not achieved that just yet, according to Kriengkrai Techakanont, an associate professor of economics at Thammasat University.

“It’s very in its early stage, so most of the parts are imported. Only few parts they can procure locally at this moment,” he said.

Techakanont is not worried in the short term. He said it took Japanese carmakers decades to localize the supply chain and move more advanced engineering work to Thailand.

At least Thai consumers are getting a good deal. The government subsidies coupled with Chinese EV makers aggressively cutting prices have made EVs as affordable as gas-powered cars.

Thassanapun Ratanawibulsom paid 700,000 Thai baht, or about $20,000, for her BYD model in 2023. She thought it was a fair price, until Chinese EV makers started lowering prices.

Thailand’s consumer protection agency launched an investigation into BYD’s discount practices after angry car owners complained. The firm was reportedly cleared of breaking the advertising law, according to Reuters.

Today, Ratanawibulsom said her same BYD model costs 20% less.

“I feel betrayed,” she said. Still, Ratanawibulsom has not complained to BYD because she is delighted with the car’s performance and how much she is saving on running costs.

“It’s more cost effective [than a gas-powered car],” she said. “Per month, I used to spend about 5,000 baht [$150] on petrol. Now I pay 1,500 baht [$44] to charge my EV.”

As a consumer, she is happy to have more car choices, but as a salesperson for Japanese gas-powered cars, she is worried. 

“I don’t think more Chinese EV investment is a good thing, because when Chinese brands come, they cut prices to sell more EVs and it hurts the Japanese car industry,” Ratanawibulsom said.

However, the Thai government does not have a lot of leverage to rein in Chinese EV makers.

Had the Thai government not engaged Chinese EV makers with its EV policy, Chinese brands could still sell their cars to Thai consumers by simply importing all EVs tariff-free, according to Techakanont, the economics professor.

“If that is the case, what kind of value would be created in Thailand?” he said.

For now, the Thai government’s focus is just to be a part of the global EV supply chain.

Additional research by Phuriphat Dejsuphong and Charles Zhang