Thailand is seeking to challenge Malaysia as a leading automotive battery hub. It has already attracted automotive industry players such as Ford, Toyota and Chinese challengers BYD, SAIC and Great Wall.
Analysts say the region’s significance for the EV component industry can be illustrated by the recent investment in a lithium-ion battery plant in Malaysia by China’s EVE Energy. The factory will produce batteries for electric vehicles (EVs) and power tools.
Thailand’s ambition is to manufacture 30% of the total clean car output by 2030, which requires 40 GWh of domestic battery production. The government is targeting leading Chinese manufacturers such as CATL to choose Thailand as location for EV battery investments.
The first Thai factory by CATL will be a joint venture with Arun Plus, a subsidiary of Thailand’s national oil company PTT, which also owns the local 30 GWh lithium-ion battery manufacturer GPSC. Svolt Energy Technology of China has also announced that it will establish a Thai plant for EV battery packs in 2023. Great Wall Motor of China will produce EV batteries in Thailand to support its production of hybrid cars.
According to KPMG, the international business consulting firm, Thailand also hopes to attract battery recycling services and manufacturers of charging equipment and EV specific parts.
The domestic market is still not fully developed, but the demand for EVs started booming in 2022 – the 30,000 unit mark to be reached in 2023. The development has also attracted more than €2 billion ($2.2 billion) investments from the EV industry. The Thai government exempts companies investing in EV production from the 20% corporation tax for 3–8 years. For vital EV parts there is an additional 50% tax rebate for another five years.
Thailand has clearly decided to challenge neighbor Malaysia to control the automotive hub in southeast Asia. Malaysia has for several decades been top three car producer in the region. The national flagship Proton and other local brands are accompanied by partners to Kia, BMW, Mazda, Volkswagen and Hyundai.
The Malaysian Automotive Association said production volumes increased more than 30% from 2021 to 2022. Malaysia also applies an excise duty and tax exemption for locally assembled and imported EVs until 2027. For EV charging equipment manufacturers, a 100% tax exemption applies until 2032.