Led By Toyota, Will The Next EV Boom Be In Thailand?

Japanese and Chinese automakers are vying for influence in Thailand, often called Asia’s Detroit, as Chinese EV sales wane, according to a new report from Nikkei Asia this week.

Last month, Toyota Chairman Akio Toyoda met Thai Prime Minister Paetongtarn Shinawatra in Bangkok to discuss strengthening the country’s auto industry, highlighting its role as a production hub. The Prime Minister expressed interest in supporting hybrid vehicle development through potential government initiatives.

“With demand for EVs slowing, Toyota sees this as a great opportunity to ramp up its lobbying efforts,” one Japanese government source in Thailand said. 

“Toyota is one of the only companies that can lobby such a wide range of figures, including prime minister and other politicians affiliated with former Prime Minister Thaksin Shinawatra, senior government officials like Industry Ministry Permanent Secretary Nattapol Rangsitpol, and influential royal insiders,” they continued. 

The report from Nikkei says that Toyota executives, including Chairman Akio Toyoda, met Thai Industry Minister Akanat Promphan in Japan last November, reaffirming their commitment to investing in Thailand while urging incentives for pickups and hybrids.

New vehicle sales in Thailand fell 27% year-on-year to 518,659 between January and November, partly due to stricter auto loan requirements. EV sales dropped 5% to 61,443 after surging in 2023, while hybrids rose 32% to 105,434, with models like Toyota’s Yaris Cross performing well.

Thailand recently maintained a 6% tax rate on hybrids, abandoning plans for gradual increases, but EVs still enjoy more generous incentives, including subsidies up to 100,000 baht ($2,900), as the country targets 30% electric vehicle production by 2030.

Government policies have played a significant role in shaping Thailand’s auto industry. Tax cuts in the 2010s promoted eco-cars, while a tax rebate for first-time car buyers spurred demand in 2012-2013.

More recently, EV subsidies introduced in 2022 attracted over 20 Chinese automakers. However, as EV demand slows, companies like Great Wall Motor and SAIC Motor are lobbying for relaxed production requirements tied to these subsidies.

In response, the Thai government has delayed production deadlines to 2025 and beyond, reduced import quotas from earlier years, and allowed re-exports of Chinese-imported EVs. However, subsidies are now temporarily suspended for non-compliant automakers.

Amid declining car sales, including a sharp drop in EV demand, the government has introduced new incentives for mild hybrid vehicles, which combine low-output electric motors with internal combustion engines.

This move, seen as favoring European and Japanese automakers, counters the EV policies perceived to benefit Chinese companies. With Japanese manufacturers holding over 70% of the market share, they are expected to push for further measures as Thailand’s auto market faces challenges reminiscent of the pandemic and financial crises.