Thailand is taking steps in becoming the regional leader in electric vehicles .
Thailand is taking steps in becoming the regional leader in electric vehicles
Last year, the global electric vehicle (EV) stock surpassed 2 million cars after crossing the 1 million unit threshold in 2015. According to research by the International Energy Agency (IEA), Norway has incontestably achieved the most successful deployment of electric cars in terms of market share, globally. It is followed by the Netherlands, with a 6.4% electric car market share, and Sweden with 3.4%. China, France and the United Kingdom all are trailing with market shares close to 1.5%.
Despite the uptake of EVs, the cold hard truth is that they still correspond to a mere 0.2% of the total number of passenger light-duty vehicles in circulation worldwide, and that the current electric car market situation is largely influenced by the policy environment.
Thailand, also known as The Detroit of Asia for its massive automotive manufacturing base, has set its sights on becoming ASEAN’s leading EV hub and main production base, thanks the Thai government’s pledge to put 1.2 million electric cars on domestic roads by 2036.
The government’s main driver to increase demand and develop the necessary ecosystem to make EVs viable in the kingdom is the Board of Investment (BOI), which recently have launched new schemes to promote electric cars through various tax incentives to spur growth in not only vehicle manufacturing and import, but also EV part manufacturing and assembly, as well as developing a nationwide grid of charging stations.
“The reason why Thailand is supporting EVs is quite obvious – we all of us are responsible for climate change, and the world is slowly but surely moving towards EVs. Since the automotive industry plays such a vital role in the Thai economy, we are in a unique position to take the lead in ASEAN,” says Duangjai Asawachintachit, BOI’s Secretary General.
She explains that as part of “Thailand 4.0”, the government’s new economic model aimed at demolishing the middle-income trap and moving into the high-income range, there are ten targeted or “s-curve industries” that have been identified as the drivers for the “next phase of Thailand’s industrial development”, which include nextgeneration cars, smart electronics, affluent, medical and wellness tourism, agriculture and biotechnology, food, robotics for industry, logistics and aviation, biofuels and biochemical, digital and medical services.
For EVs, the approved tax incentives cover the production of three types of electric cars and their parts in Thailand, including hybrid electric vehicles, plug-in hybrid electric vehicles, and battery electric vehicles, with each of them entitled to a different tax incentive package.
“BOI has been hard at work with other related agencies to finally come up with a policy, comprising a set of measures to launch the EV industry in Thailand. These measures cover a range of EV products, including transitional technologies, such as hybrid and plugin EVs. It’s because we also have to be realistic and understand that in order for EV to really take off in Thailand, it needs proper infrastructure, including nationwide charging stations, and this development will take time in order for us to reach the status of where Norway is today. Apart from the local market, we aim to be a regional production hub of EVs and continue to be a leading regional player in the automotive industry,” Ms Duangjai adds.
The Ministry of Energy is already implementing a three-year plan, subsidising the establishment of a further 150 charging stations, offering financial assistance to the private sector to help carry the torch. Also, Thailand’s littleknown Energy Absolute Plc has recently unveiled plans to establish and operate 1,000 EV charging stations by end of 2018,
with a projected investment of THB 600 million.
Another milestone that will certainly help the government to achieve its vision of becoming the regional EV hub, has been the opening of the Technology and Innovation Learning Center for Electric Vehicles in June 2017. The centre was launched to tackle two objectives: development of EV technology, as well as acting as the learning centre for all stakeholders, including entrepreneurs, government officials and the general public.
“Even in Europe, it has taken a long time for EV to develop and there is certainly still room to grow if you look at the numbers. In Thailand, it’s kind of a chicken and egg scenario – whether you encourage demand first and then develop the infrastructure, or vice versa. Instead of waiting for the public to catch up, and the government perhaps needs to take the lead to transition into EVs,” Ms Duangjai says.
The first step, she says, is to introduce EV to the public sector includes public transport projects, such as buses and Thailand’s vibrant tuk tuks. Currently there is an ongoing pilot test of 200 electric and dieselhybrid buses running on the 137-bus route by the Ministry of Transport, and some university campuses, including Chulalongkorn, are using EV for their public transport.
When it comes to the potential size of the market, Ms Duangjai remains cautious.
“It’s extremely difficult to predict with any measure of accuracy how big the EV market could potentially grow since it largely depends on how quickly we can get the infrastructure in place, along with a number of other factors and the level of collaboration between the relevant agencies. EV is still a very new product in Thailand, and this is the key reason why we’re offering incentives to EV makers to test the market first.”
Regardless of all of the tax incentives that the government can offer, one of the key factors will undoubtedly be whether the car manufacturers themselves will find ways to cut costs on EVs. Data from LMC Automotive reveals that hybrid car sales in Thailand during 2015 accounted for a mere 1% of total cars sold, the same level as in 2012. What this underlines is that despite the availability of imported hybrid or plug-in hybrid vehicle stock, the demand is simply not there and the low sales figures can be attributed to the premium prices for EVs compared to conventional cars.
To help develop new EV technologies and push innovation that will eventually make it more affordable, Ms Duangjai invites any interested Norwegian companies to consider Thailand for expansion.
“Norwegians are not major players in EV production, but there is a lot of expertise and experience in dealing with the environmental issues, so there’s definitely a lot to learn. We are offering not only very generous government policies, but a lot of support as well. If we’re talking about the automotive industry, Thailand has an extensive supply chain and its efficiency is very important to the government. That’s why we have managed to attract a lot of part makers and key suppliers. Just look at the list of Top 100 automotive parts suppliers in the world – more than half of them already have manufacturing facilities in Thailand.”
Taking a broader view of the Thailand 4.0 areas of interest, Ms Duangjai has also identified the digital economy as a basis for collaborating with the Nordic countries. She says there are already some software development companies with operations in Thailand.
Another s-curve industry that Thailand is targeting is biochemical, and Ms Duangjai notes the Nordics are among the best in the world when it comes to making the most effective use of biomass, of which there is plenty of in Thailand, and she hopes that some Nordic companies would be interested in setting up bio-refineries in the kingdom.
“My message to any Norwegian or Nordic companies that are interested in doing business in Thailand is that they are most welcome to contact BOI directly, either in our headquarters here in Bangkok, or our office in Stockholm which covers all the Nordic countries. Additionally, we are doing road shows in the Nordics on a regular basis in order to talk to the companies directly. If there are any companies that have activities in the areas that would be eligible for BOI assistance, we can certainly facilitate opening a dialogue.”
Above left: Newly appointed Secretary General of Thailand Board of Investment, Duangjai Asawachintachit. Above: The Tesla Model S on a road in Norway. Norway is a world leader in the use of electrical vehicles.