Chinese firms are increasing their investment in Thailand, with demand for electric vehicle (EV) production leading the way.

Key Takeaways

  • Chinese electric vehicle (EV) makers are investing in Thailand due to its stable business environment and incentives for new energy industries.
  • Hozon New Energy Automobile has set a target of selling 15,000 EVs in Thailand by 2023, accounting for half of its overseas turnover.
  • The Thai government aims for EV production to reach 30% of total auto manufacturing by 2030, and is in talks with companies such as CATL to build production facilities.

Chinese electric carmakers are pouring in Thailand in spite of political uncertainties, chairman of Thai-Chinese Chamber of Commerce said at a forum held in Bangkok Sunday.

Thailand as a production and distribution hub

More and more major Chinese EV players are targeting Thailand in the next EV push as they believe wooing foreign investors will remain the invariable policy of any government in Thailand, Narongsak Puttapornmongkol, the chamber’s chairman told reporters at the 16th World Chinese Entrepreneur Convention (WCEC).

The three-day convention, wrapping up on Monday, was attended by more than 4000 entrepreneurs of Chinese descent from over 50 countries. Narongsak said at least 500 million baht would be circulated in Thailand, as most of them plan to travel in the country. 

Thailand’s opposition parties trounced the pro-royalist military establishment in the May 14 election, but the new government has yet to be formed. Political uncertainty is stoking anxiety among the public and business sector to some degree.

“The most promising industry”

China’s Hozon New Energy Automobile Co who set foot in Thailand since March, has set a target of 15000 EVs’ sales in Thailand within 2023, accounting for half of its overseas turnover.

Electric vehicle is the most promising industry now. Thailand wants new energy industries, and has tailored various investment incentives for EV investors. China touches the spot right now.

Narongsak Puttapornmongkol, chairman of the Thai-Chinese Chamber of Commerce

 “We will set up our own parts and accessory factory and have in-house research and development on key parts”, said Fang Yunzhou, Chairman of Hozon Auto New Energy Co at a sub-forum of the event.

Hozon Auto’s subsidiary Neta started constructing its first production facility outside China. The facility in Bangkok will go into operation in January 2024. The new plant will become Neta’s key location for manufacturing and exporting right-hand drive electric cars to ASEAN countries.

Chinese EV makers are competing on what’s happening inside the cabin. Fang said Neta features key technologies including smart control, smart cabin, self-driving and internet of vehicles.

A stable and friendly environment for Chinese firms

“Chinese firms come to Thailand because they find a low risk, stable and friendly environment with cheap and high-level industrial competency.” said Joe Horn-Phathanothai, CEO and founder of Strategy613, in a separate interview.

 “Chinese investment in Thailand has brought a new dimension to Thailand that did not exist before, through technology transfer for example. The latest being a tokamak nuclear fusion reactor transferred by China to Thai scientists.”

Joe Horn-Phathanothai, CEO and founder of Strategy613

30% EV production share goal by 2030

GAC AION in April submitted an investment commitment letter to Thailand’s East Economic Corridor Policy Committee. The Chinese EV maker eyes the southeast Asian’s second economy as its first overseas base. Chang’an Auto also said it will invest 9.8 billion baht in a facility in Thailand to produce 100,000 electric vehicles annually.

The Thai government wants electric vehicle production to reach about 30 percent of the total auto manufacturing by 2030. Surveys show that the sales volume of EV in Thailand surged to nearly 10,000 units in 2022 from less than 2000 units in 2021. It’s expected that the sales volume will double in 2023.

The battle of EV also moves to supply chain. Gotion High-tech Co, a Chinese battery company announced last December to set up a joint venture with Thailand’s PTT group, to build a facility producing lithium-ion battery for electric vehicles.

Chinese EV makers sales
Chinese EV makers sales

Meanwhile, Thai authorities are in talks with China-based CATL, the world’s biggest EV battery maker, and others to build production facilities in Thailand to fuel its EV production hub ambitions.

Though investment from China, highlighted by EV, has been stimulated in recent years due to Thai government’s incentives on new energy industries, Japan remains the largest foreign direct investor in the first five months.

Data from the Board of Investment shows that from January to May 2023, Thailand received a total foreign investment of 45.392 billion baht, with 15.873 billion baht from Japan, the highest amount. China and Singapore followed with 11.479 billion baht and 6.356 billion baht respectively.

The biennial WCEC started in 1991, with the most recent edition held in London in 2019 before a pandemic hiatus. Thailand previously hosted the event in 1995, and this year will be the second time.

The theme of the meeting is to promote trade and investment for win-win partnerships that help boost the Thai economy to recover quickly from the COVID pandemic, said Narongsuk.

All in all, it seems that the Thai government’s incentives for new energy industries have successfully stimulated investment from China and other countries. It remains to be seen whether Thailand will achieve its goal of producing 30% of total auto manufacturing from EVs by 2030. Nevertheless, the development of the EV industry in Thailand is likely to be an interesting topic to keep an eye on in the coming years.

About the author

Thailand Business News covers the latest economic, market, investment, real-estate and financial news from Thailand and Asean. It also features topics such as tourism, stocks, banking, aviation, property, and more.

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