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Customer LoginsBriefCASE: EV manufacturing in Thailand gets booster shots from Chinese automakers
Thailand is not just attracting honeymooners from across the
globe. Through its policies, the Thai government is attracting
billions of dollars in foreign investments to propel the country
into a regional hub for the electric vehicle (EV) manufacturing.
The policies seem to be working as there have been many
announcements over the past one year by original equipment
manufacturers, especially from mainland China, and battery
suppliers for setting up of new plants in Thailand.
In March, Neta Auto commenced mass production
of EVs at its first Thai factory, which has an annual
production capacity of 20,000 vehicles. In February, GAC Aion
started construction of an EV factory in Thailand that will have
capacity for producing 50,000 units per year. The plant will be
built in two phases; the first phase is scheduled for completion in
July 2024. In January, Great Wall Motor started mass
production of GWM Ora 03 in Thailand. This marked the first
time the Chinese OEM mass-produced an EV outside of China.
Additionally,
Changan Automobile is building an EV factory in the country
that is expected to begin operations in 2025 with an initial
capacity of 100,000 units per year. Automakers such as BYD and SAIC
are also ramping up production capacity for EVs in Thailand.
Besides having the potential for becoming an EV production and
export hub in the future, the rising sales of Chinese vehicle
brands in Thailand seems to be a major factor behind the
investments. According to a report by Thailand Business News,
models from mainland Chinese automakers accounted for nearly 80% of
the EV market in 2023.
Updated policy expected to push EV demand
Thailand aims to convert 30% of its annual automotive production
into EVs by 2030. In this regard, earlier this year The National
Electric Vehicle Policy Board (EV board) approved the second phase of EV Package, known
as EV 3.5, for four years (2024-2027), which replaced the EV 3
program started in 2022. As part of the EV 3.5 package, the
government will provide subsidies for the purchase of electric
cars, electric pickup trucks and electric motorcycles based on the
vehicle types and battery capacities.
A key point to notice in the EV 3.5 package is the absence of any
subsidies for hybrids, including plug-in hybrids (PHEV). This
highlights the government's attention for promoting adoption of
purely battery-powered vehicles. However, the excise department has
proposed a slightly lower rate for hybrids and PHEVs starting 2026,
depending on the CO2 emissions for hybrids and electric range on a
single charge for PHEVs. The rates are expected to increase yearly
by two percentage points every two years for HEVs.
To be eligible for the incentives, the company's domestic EV
production must offset any CBU imports at a ratio of 1:2 by 2026
(two BEVs must be produced in Thailand against one imported CBU)
and 1:3 by 2027.
Production of EV batteries to grow
The new policy is pushing EV manufacturers in Thailand to deploy
a highly localized and in-house production strategy for EV parts,
including EV batteries. Recently BMW commenced construction of a
facility in Rayong to produce Gen-5 high-voltage batteries.
This plant, which will convert imported battery cells into modules,
will help BMW increase the localization for BEVs that it plans to
produce in the country starting mid-2025. Last year, Svolt
announced that it has commenced construction at its EV battery
module and pack assembly plant in Thailand. According to Great Wall
Motor, Svolt will be the primary battery supplier for the
Thai-built GWM Ora 03.
According to S&P Global Mobility analysts, the demand for
battery cell from light vehicles manufactured in Thailand is
expected to increase nearly 10-fold in 2024 compared with 2023.
S&P Global Mobility expects a growing shift in Thailand from
PHEVs to BEVs, which are equipped with much bigger batteries.
To boost EV cell manufacturing in the country, the Thailand EV
board has approved cash grants for cell manufacturers. To be
eligible for the grants, the cells manufactured should have a high
energy density of not less than 150 Wh/kg. Batteries must also have
a life cycle of not less than 1,000 cycles, counting from 70% of
the nominal capacity at a depth of discharge of not less than 80%
at a test temperature of 20-25 degrees Celsius. Providing detailed
testing conditions like this helps battery manufacturing companies
develop clear strategies.
In particular, the condition of 150Wh/kg energy density is expected
to satisfy not only the latest lithium iron phosphate, or LFP,
batteries (such as BYD's second generation blade cell with
180Wh/kg), but also sodium-ion batteries (such as CATL's 160Wh/kg
sodium-ion battery). This will provide opportunities to manufacture
cost-competitive LFP and sodium-ion batteries, not just high nickel
lithium ion batteries.
Author: Srikant Jayanthan, Senior Research Analyst,
Supply Chain & Technology, S&P Global
Mobility
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This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.