Thailand requires Chinese EV makers to increase localisation rate

Thailand’s Industry Ministry is requesting Chinese electric vehicle manufacturers to assemble their EVs with at least 40% of parts sourced locally in a move to support the automotive supply chain in the Southeast Asian nation.

The 40% threshold was suggested following talks involving the ministry and GAC Aion New Energy Automobile, an EV maker under Guangzhou Automobile Corporation (GAC).

Thai auto parts makers, which are mostly familiar with components designed for internal combustion engines (ICE), still require support from car manufacturers, though the latter are shifting their focus to electric mobility technology, said Industry Minister Pimphattra Wichaikul.

Authorities want to make sure local auto parts makers can adapt to the technological changes and are able to continue their businesses, following concerns that Chinese EV manufacturers will mainly buy EV components from Chinese firms and build their own EV supply chain.

The Board of Investment (BoI) earlier met with Chinese EV firms to discuss the possibility of using local auto parts for their EV operations in Thailand.

Narit Therdsteerasukd, Secretary-General of the BoI, said that most Chinese EV makers agreed with the government's request to use auto parts made by Thai companies, adding that this is a good sign.

According to the BoI, Chongqing-based Changan Automobile, which has committed to investing up to 10 billion THB (270 million USD) in Thailand, will start with a local content proportion of 60%, increasing it to 90% in the future. Meanwhile, Neta, another EV manufacturer from China, vowed it would buy parts from 16 companies based in Thailand, which would account for 60% of total components, and it would increase the share to 85% over the long term.

Over the past 2-3 years, the BoI supported investments worth 80 billion THB in the EV industry, with total EV production of 400,000 units. The board is promoting the growth of the EV industry by granting investment incentives to EV-related businesses, including battery production and EV charging facilities.

However, Pimphattra said this does not mean the government will "leave behind" manufacturers of ICE vehicles, elaborating that authorities will continue to support ICE makers which have run businesses in Thailand for over a decade as well as producers of hybrid EVs and plug-in hybrid EVs.