Several obstacles remain for the local electric vehicle market

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An electric vehicle model displayed at the Thailand International Motor Expo 2021. (Photo: Varuth Hirunyatheb)

The lingering question after the launch of the government’s electric vehicle (EV) incentive scheme earlier this year is whether lower prices will be able to entice potential car buyers.

The government is betting that these next-generation, more environmentally friendly vehicles will completely replace gasoline-powered cars, which have dominated the auto market for decades.

In the opinion of the Federation of Thai Industries (FTI), EV prices may not be attractive enough to bring about a massive change, while the availability of EV charging facilities poses a challenge to the development of the industry. EV infrastructure.

On the supply side, a number of local auto parts suppliers also need more time to fully adopt electric vehicle technology, the group said.

Compared to cars using internal combustion engines (ICE), many EV models are more expensive, priced at over 1 million baht, making them out of reach for many budget buyers, said Surapong Paisitpatanapong, vice president and spokesperson for the FTI Motoring Club.

“Research and development on new mobility technologies are among the main factors driving the high prices of electric vehicles,” he said.

While prices currently remain a major barrier for buyers, the FTI believes electric vehicles will be more affordable in the long term, paving the way for the establishment of a mass market for electric vehicles.

The longer lead time should allow auto parts suppliers to adjust their production in line with the latest EV technology, Surapong said.

Surapong believes a push for the development of the EV industry will pay off in the long run.


NICHE MARKET

Electric vehicles have been seen as cars for affluent motorists and charging infrastructure is still limited to a handful of places, he said.

Electric vehicles have been purchased by small groups of high-income people who can charge their vehicles at home or in selected areas, such as high-end malls and high-end cafes, Surapong said.

Part of the impetus for government incentives for electric vehicles is for the country to become less dependent on fossil fuels.

“Electric vehicles are still seen as vehicles for the wealthy. They will initially serve that niche market, not the mass market,” he said.

Prices will continue to be a major barrier for people who want to buy electric vehicles but have limited purchasing power due to high levels of household debt, Surapong said.

DEBT OBSTACLE

Thailand is plagued by huge levels of household debt, recently reaching over 90% of GDP.

The country is also struggling to escape the middle-income trap. In the latest national strategic plan, the government set a target to increase gross national income per person by an average of 70,000 baht to reach 360,000 baht in 2023 from 290,000 baht in 2019.

Once Thais have more income, electric vehicles may be able to compete with ICE-powered cars, he said.

Electric vehicle infrastructure is also crucial for the growth of the electric vehicle industry as it can influence buyer decisions, Surapong said.

If electric vehicle charging outlets become more widely available, people will be less concerned when their battery charge is nearly depleted, especially when traveling within the country.

“Electric vehicle prices, charging stations and car buyers’ confidence in electric vehicle installations are the main factors that can boost the industry,” he said.

According to Sharge Management Co, a provider of battery vehicle charging systems, there are currently around 6,000 charging outlets to serve 40,000 electric vehicles.

If the government can increase the number of electric vehicles in the country to 300,000, the number of charging points must increase to 100,000 nationwide, Sharge Management said.

BOOST SALES

The EV incentive package approved by the cabinet in February has become a staple of national auto events.

The package includes tax cuts and subsidies to promote EV production and consumption in 2022-2023.

Subsidies range from 70,000 baht to 150,000 baht depending on vehicle type and model, while excise duties and import duties are lower on completely demolished and completely built units.

The import duty exemption has been applied to essential electrical parts, including batteries, traction motors, compressors for battery electric vehicles, battery management systems, drive control units and reducers.

The financial relief should boost electric vehicle sales somewhat, but the market will grow slowly because there is such a big price gap between electric vehicles and ICE-powered cars, the FTI car club said.

“We expect to have a clearer picture of the EV market in the second half of this year when the EV incentive package will have more effect,” Surapong said.

ICE-powered cars still dominated car reservations at the 43rd Bangkok International Motor Show, accounting for 31,896 units out of 33,936 units in total, according to Jaturent Komolmis, the motor show’s vice president and general manager. of Grand Prix International Plc, which organized the 12 day event which ended on April 3.

Toyota was the top seller with 5,128 orders, followed by Honda (3,019), Mazda (2,906), Isuzu (2,594) and Mitsubishi (2,553).

Electric vehicle reservations rose 10% to 2,040 units, with SAIC Motor-CP, car maker and distributor MG, receiving the most orders, followed by Chinese sport utility vehicle maker Great Wall Motor (GWM ).

Mr Jaturont said both brands have received a good response from buyers as they have signed deals with the government to join its electric vehicle incentive scheme.

MG offered a 150,000 baht discount on its electric vehicles, while GWM offered a 160,500 to 161,000 baht discount, he said.

Last year, Thailand registered 5,781 new electric vehicles, including 1,955 passenger cars, 3,673 electric motorcycles and 153 other vehicles, including three-wheeled tuk-tuks and buses, the Electric Vehicle Association said. of Thailand (EVAT).

GETTING TOGETHER WITH EVS

Efforts by auto parts makers to keep up with new electric vehicle technology require varying degrees of adjustment, said Krisda Utamote, president of EVAT.

“Many companies are able to align their production well with electric vehicles, while others risk losing competition if they don’t adapt to the changes,” he said.

Producers that have not been badly affected by the global transition to electric vehicles are those that make bodies, doors, interior fittings and suspension systems.

“These are necessary parts of cars that don’t require a lot of changes to serve electric mobility technology,” Krisda said.

However, companies involved in the manufacture of key components such as engines, pistons, rings and electrical systems will have to make changes to their production or they will suffer a severe impact from the disruptions in the automotive industry, he said. he declares.

EVAT believes auto parts makers still have time to adapt to meet the growing demand for electric vehicles in Thailand.

“Thailand’s electric vehicle industry will grow slowly,” Krisda said.

The National EV Policy Committee announced in March 2021 that it wants electric vehicles to make up 50% of locally produced vehicles by 2030, as part of an ambitious plan to make Thailand a regional hub for electric vehicle production. electric vehicles.

According to the FTI, about 2,500 auto parts companies, including major global suppliers and small and medium-sized enterprises, operate in Thailand as original equipment manufacturers (OEMs), selling their products in domestic markets and global. About 700 to 800 of them are members of the federation.

Up to 80% of OEM auto parts are sold to global automakers, with the remaining 20% ​​supplied to the aftermarket.

According to the FTI, its auto parts club is trying to help auto parts manufacturers grow their business.

The club has been working on a development plan, with a proposal to improve and modernize the factories so that they can diversify into the production of certain aircraft components and medical devices to serve these markets in the future.

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