Inside Thailand’s EV Revolution

From luxury cars to tuk-tuks, an electric age is dawning

By the end of 2022, an all-electric Mercedes-EQS will roll off the assembly line in Bangkok, marking another milestone in Thailand’s remarkable journey from being the center of conventional automobile manufacturing to becoming a regional leader in electric vehicle (EV) production.

The German luxury automaker not only chose Thailand as its first location in Southeast Asia to manufacture the groundbreaking EQS, but also chose the kingdom as one of only seven locations worldwide to produce the high-performance lithium-ion batteries capable of powering the vehicles more than 700 kilometers on a single charge.

“This shows how important Thailand is to us,” said Roland Folger, President & CEO of Mercedes-Benz’s Thai business, in an interview. “The EQS is the absolute highlight of our full-battery vehicles – technically the very best. In Thailand we have partners that we know can deliver.”

Mercedes-Benz, which has been building cars in Thailand for the local market since 1979 and reported a pandemic-resistant sales increase of 13 percent last year, is now hoping to start exporting vehicles from its Bangkok plant, Folger says. And it’s far from alone in staking its regional EV ambitions on a country that has grown to be the 10th-biggest automaker in the world by 2021, while developing a green growth model to combat climate change.

A Mercedes-Benz sedan rolls off the line at the company’s Thonburi Automotive Assembly Plant in Samut Prakan, near Bangkok, Thailand, which will produce all-electric Mercedes EQS models through the end of 2022 – another milestone for EV production in Southeast Asia Auto Hub.

Auto giants such as Japan’s Toyota Motor Corp and China’s Great Wall Motor and SAIC Motor have also signed up for a government incentive plan to boost sales and production of electric vehicles in Thailand.

Toyota is the largest vehicle manufacturer in the world – and Thailand – and has its Asian headquarters in Bangkok. Great Wall and SAIC, which have already helped China become the world’s largest electric vehicle market by volume, now plan to make Thailand their regional manufacturing base for ASEAN – a 10-nation grouping with 681 million consumers.

Meanwhile, Mitsubishi Motors, which became the first company to export Thai-made cars in 1988, is banking heavily on Thai-made plug-in hybrid electric vehicles (PHEV) as it transitions to all-electric powertrains for passenger cars by 2024.

Thailand, Southeast Asia’s second largest economy with a population of 70 million, is also attracting heavyweight newcomers determined to capitalize on the EV revolution. Foxconn Technology Group, the world’s largest custom electronics company best known as the maker of Apple iPhones, has chosen Thailand as one of its first two locations worldwide to build electric vehicles.

Foxconn has partnered with Thailand’s state-owned oil and gas giant PTT – one of the world’s largest energy companies – to create a joint venture company, HORIZON PLUS, which plans to invest between $1 billion and $2 billion to build finished cars to build for other manufacturers using a modular platform and software developed by Foxconn.

With production starting in 2024, the partners plan to produce between 150,000 and 200,000 vehicles annually in Thailand’s high-tech Eastern Economic Corridor by 2030. A potential early customer for the joint venture: Chinese start-up Hozon New Energy Automobile, which wants to work with HORIZON PLUS to produce right-hand drive electric vehicles suitable for countries like Thailand and about 70 other left-hand drive countries.

Local Thai entrepreneurs are already building electric vehicles and developing the infrastructure to power them. Energy Absolute, a publicly traded Thai company with a market valuation of US$10 billion, sells electric buses and boats, has an electric car ready to launch and is building what is currently the largest network of charging stations in the country.

Other local companies, including startup MuvMi and long-established water transport operator Chao Phraya Express Boat Co., are replacing the country’s iconic but previously highly polluting “tuk-tuk” auto rickshaws and diesel-powered fast riverboats with zero-emission electric versions. Meanwhile, CrystalLyte Co., a startup from Chulalongkorn University in Bangkok, is developing new technologies for companies like PTT and Energy Absolute to improve EV battery efficiency using carbon nanomaterials made from CO2.

The rate of change is so high that the Thai government estimates that by 2030 – in just eight years – 30 percent of all cars made in Thailand will be electric. That would mean 750,000 of the 2.5 million vehicles the country is expected to produce this year for local and international markets, and of those 750,000, half will be BEVs.

Thailand is also setting aggressive targets for the infrastructure needed to support its zero emissions ambitions. The government estimates that around 900 public fast-charging stations have already sprung up across the country at gas stations, shopping malls, condominiums, golf courses, hospitals and almost anywhere motorists spend their free time.

This number is expected to increase to 4,400 by 2025, 12,000 by 2030 and 36,500 by 2035.

Thailand’s emergence as an electric vehicle hub has been accelerated by extremely favorable government policies that offer comprehensive incentives for both investors in the electric vehicle sector supply chain and car buyers. The Thailand Board of Investment (BOI) offers 3-11 years tax holiday for the production of all types of electric vehicles, including BEV platforms. In addition, the BOI grants investment incentives for EV-related infrastructure, especially charging stations, to accelerate the growth of the domestic EV market.

In addition, the Thai government is offering subsidies that aim to reduce the price of electric vehicles by around $2,000 to $4,400 per vehicle, depending on the model and battery capacity.

Investors seem to be paying attention. In the first quarter of 2022, investment commitments in the automotive and parts sector more than quadrupled year-on-year to the equivalent of $1.2 billion.

Positive evidence of Thailand’s clean energy goals is its broader commitment to sustainability and the fight against climate change. Domestically, the government has adopted an all-encompassing, green growth model known as the Bio Circular Green Economy, or BCG. And throughout 2022, Thailand is attempting to lead the world in a similar direction during its year-long presidency of the Asia Pacific Economic Cooperation Forum (APEC), the 21-nation grouping that includes the world’s three largest economies, the US , China and Japan and generates 60 percent of global economic output and energy consumption.

On the EV front, Thailand’s commitment is further illustrated by the participation of state champion PTT, a Fortune 500 company majority-owned by the Treasury of Thailand and 13 percent of Thailand’s market capitalization with annual sales of US$51 billion stock market and was once just a synonym for oil and gas.

Today, PTT not only develops clean energy cars with Foxconn, but also makes major investments in battery research and development, EV charging stations, and an EV rental platform. “We believe that every step we take has more benefits for the world and Thai society,” said Dr. Buranin Rattanasombat, Senior Executive Vice President of Innovation and New Ventures at PTT, in an interview. “Our collaboration with Foxconn will be an important driving force in the development of the EV value chain in Thailand.”

Kay Chiu, executive director of Foxconn and CEO of the HORIZON PLUS joint venture, says Thailand’s long history of car manufacturing has prepared the industry for the EV transformation. “With the incredible support of the Thai government and the BOI’s tireless efforts, we believe we made the right decision to come here,” he said.

Elliot Zhang, president of Great Wall Motors’ ASEAN business, says the region is one of the world’s most important markets for China’s largest SUV maker. Hence Great Wall’s decision in 2020 to acquire an auto manufacturing facility in Thailand formerly owned by General Motors.

“Thailand has superior geographic advantages, a complete industrial supply chain and sufficient reserves of talented personnel,” says Zhang, whose locally produced Haval H6 hybrid SUV and ORA Good Cat BEV models imported from China have been successful in the past year Thailand debuted. “We are confident that all of these strengths will enable our strategy to grow Thailand into GWM’s R&D and manufacturing hub for the ASEAN region.”

China’s SAIC has similar ambitions for its MG brand, which it manufactures and distributes in Thailand through SAIC-CP, a joint venture with Thai conglomerate CP Group. MG describes its latest ZS model as part of its “mission to elevate the country’s automotive industry to an international level”.

Thailand has long been a regional base for Mitsubishi Motors. Eiichi Koito, President and Chief Executive Officer of Mitsubishi Motors Thailand, notes that his company’s role as the first major automaker to introduce a mass-produced BEV model back in 2009, and Thailand’s importance as the company’s largest manufacturing center outside of Japan: “We appreciate the Thai government’s policy of promoting electric cars in the country with promotional packages that help both brands and consumers.” Mitsubishi Motors’ initial response was to launch the Outlander PHEV in Thailand, with more electrified models to follow. “Our clear direction now is to bring 100% of our passenger cars to market with electric powertrains by 2024,” said Koito.

Back at Mercedes-Benz headquarters in Bangkok, President & CEO Folger reflected on his company’s growth from producing a single E-Class (W123) model in 1979 to 28 models, including hybrids and the 100 percent electric EQS, today . During this time, Thailand’s growing prosperity and promotion of sustainable development through green technologies have helped Mercedes-Benz sales to increase even during the Covid crisis.

“We feel reinforced in our belief that we are in the right place,” Folger said. “There is very strong market potential here and if we continue to work with the BOI to our mutual benefit, we can grow much faster than in other Southeast Asian countries.”