Despite concern over the arrival of the Chinese electric vehicle supply chain to the domestic automotive industry, Thailand must continue to fuel the growth of its EV sector, says finance permanent secretary Lavaron Sangsnit.
If Thailand does not implement policies to promote EVs today, nobody will come to establish factories here, overlooking the country because it lacks crucial raw materials for battery production, unlike Indonesia, he said.
"To establish the EV industry in Thailand, we must first create domestic demand for electric cars. This is like the chicken and the egg scenario -- which comes first? Will companies set up EV factories here if domestic demand is not yet significant enough to support it?" said Mr Lavaron.
"Domestic demand for EVs must be created. EV manufacturers not only focus on the domestic market, but also look towards Southeast Asia. Exporting from Thailand allows us to benefit from Afta [Asean free trade area] privileges."
He said the first priority should be to encourage EV manufacturers to choose Thailand as a factory location. Eventually they will use parts produced in Thailand because the nation's tier 2 and 3 auto parts suppliers have high quality, said Mr Lavaron.
Sompop Manarungsan, president of the Panyapiwat Institute of Management and a scholar on the Chinese economy, said if Chinese manufacturers want to sell EVs in the Asean market, they must adhere to the rules of origin under Afta, which requires using at least 40% of materials or components produced within Asean to qualify for tax benefits.
He highlighted a few reasons why China might be interested in investing in EV production in Thailand: a robust automotive supply chain and government support for EV adoption, offering subsidies and tax cuts in incentive packages.
These measures are more attractive to buyers than those offered in regional peers, said Mr Sompop.
In addition, the Thai auto industry is sizeable, with the capacity to produce up to 2 million vehicles annually, with the majority exported.
He said while Indonesia has lithium reserves, a raw material for EV battery production, Thailand's auto industry is much larger, meaning it can leapfrog into the EV era faster than Indonesia.