September 27, 2023

China-led EV boom in Thailand threatens Japan’s hold on key market

By Devjyot Ghoshal and Pasit Kongkunakornkul

BANGKOK (Reuters) – Thailand’s Siam Motors teamed up with Nissan Motors in 1962 with a factory rolling out four cars a day, leading to a profitable, decades-long relationship with Japanese companies that transformed it from a car dealer to a car pioneer.

But the Thai family group, which has grown its annual turnover to $7 billion thanks to that success, is now looking at opportunities elsewhere.

Siam Motors is in talks with several Chinese automakers about potential partnerships, particularly for high-end electric vehicles, vice president Sebastien Dupuy said in an interview, citing previously unreported discussions.

“EVs will be a nice growth area,” he said. “There is a market for that and we want to capture the growth.”

Siam Motors’ position reflects a rapid shift underway in Thailand, where Chinese investments worth $1.44 billion since 2020 – including by BYD and Great Wall Motor – have opened a new front in a market that traditionally dominated by Japanese car manufacturers.

On the heels of a sales slump in China, Japanese automakers now face a battle for another key Asian market due to a slow approach to electric cars, according to filing data, industry officials and analysts. The Chinese wave is already beginning to reshape Thailand’s auto industry as EV manufacturers from China bring in their suppliers and local Thai companies – including those with long-standing ties to Japanese companies, such as Siam Motors – seeking new partnerships.

Thailand is the largest car producer and exporter in Southeast Asia and the second largest market after Indonesia. Japanese automakers are so dominant that for decades they’ve almost treated it as an extension of their home market. But China last year overtook Japan as Thailand’s largest foreign investor, boosted by BYD’s investment in a new factory set to start up in 2024 amid concerted efforts by Thai officials to attract Chinese EV makers.

Thailand’s transition provides a test case for other economies as Chinese automakers ramp up exports and build overseas manufacturing hubs, in part in response to a hyper-competitive domestic electric car market.

In Europe, for example, where policies to support local EV production are still taking shape, Chinese automakers are also giving a big boost to a market where EVs now account for nearly a fifth of total sales.


Bangkok resident Pasit Chantharojwong drove a Toyota Corolla for a decade and a half before switching to Great Wall’s Ora Good Cat this year. “I’m never going back to a combustion engine car,” said the 55-year-old teacher, who also drives part-time for a taxi service.

Of the nearly 850,000 new cars registered in Thailand last year, only about 1% were electric cars, according to government data. But between January and April of this year, that share rose to more than 6%.

BYD is now the market leader, followed by China’s SAIC and Hozon and US automaker Tesla, according to registration data showing 18,481 electric cars sold between January and April.

More than 7,300 of those were BYD cars. Just 11 new EVs registered this year came from Toyota, Thailand’s dominant brand that, along with its partner Isuzu and Honda, accounted for nearly 70% of Thailand’s total car and truck sales last year.

Hajime Yamamoto, a director of the consulting division of Thailand’s Nomura Research Institute, said Chinese brands could take at least 15 percentage points of their market share from Japan over the next decade by providing affordable electric cars.

“The Japanese can only target a few premium segments,” said Yamamoto.

Toyota, which has invested nearly $7 billion in Thailand over the past decade in addition to its group companies and employs about 275,000 people, told Reuters in a statement that it is considering electric vehicle production in the country — the first official confirmation.

Toyota said it has received 3,356 bookings so far for the electric bZ4X, which began selling in Thailand last year.

It has also signaled an electric pickup on the way, but Goldman Sachs said in a note last month that “there is a growing need for them to consider other product segment expansion.”


By 2030, Thailand aims to convert about 30% of its annual production of 2.5 million vehicles to electric cars, with the ambition to become the main regional manufacturing hub, for which it is investing aggressively.

Thailand’s pitch to Chinese EV makers was its existing supply base – largely built for Japanese automakers – and willingness to provide incentives.

These include lower import tariffs on the condition of later local assembly and some tax breaks for electric vehicle production.

“We realize that if we want to be the EV hub of the region, we can’t just build the car assembly industry,” said Thailand’s Board of Investment Secretary General Narit Therdsteerasukdi, who said in recent months traveled to China several times.

“We need to strengthen the whole electric car ecosystem.”

The BOI has approved 14 projects from 13 companies, generating an annual production capacity of 276,640 electric cars as of May 31.

Great Wall has chosen Thailand as a regional hub for electric cars because of the country’s strong infrastructure, suppliers and talents, in addition to its growth potential, said Narong Sritalayon, general manager of the Thai arm.

“You want to penetrate a market that has buying power and will be able to support your growth plans going forward, especially in a new business like electric vehicles,” he said.

($1 = 35.2000 baht)

(Additional reporting by Chayut Setboonsarng in Bangkok and Daniel Leussink in Tokyo; editing by Kevin Krolicki and Jamie Freed)

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