Thailand’s EV makers seek to renegotiate incentives as sales slow down | World News
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The EV 3.0 plan, as it is called, required companies receiving tax breaks and other support to produce in Thailand this year the same number of vehicles they imported between 2022 and 2023 | Photo: Bloomberg
As sales of electric vehicles miss expectations in Southeast Asia’s largest market, Thailand’s main group of manufacturers, comprising large Chinese and Japanese firms, seeks to extend production deadlines set in a government scheme of incentives.
The scheme helped lure investment of more than $1.44 billion in new production facilities from Chinese EV car makers, such as BYD Motors and Great Wall Motor, making
Thailand a regional hub in turning out electric vehicles (EVs).
But as sales falter, partly because Thai banks have tightened loan requirements, the Electric Vehicle Association of Thailand (EVAT) is asking the government for more time to meet targets in the main incentive scheme supporting the industry.
“We’re trying to negotiate, extend the production date out a little,” the grouping’s president, Suroj Sangsnit, told Reuters, outlining a proposal that has not previously been reported.
“The conditions say we have to produce within a year, so can we ask for another year?” added Suroj, the executive vice president of SAIC Motor-CP, a joint venture of SAIC Motor and Thailand’s CP Group.
The EV 3.0 plan, as it is called, required companies receiving tax breaks and other support to produce in Thailand this year the same number of vehicles they imported between 2022 and 2023.
Missing the deadline sets them a tougher task next year, as the scheme binds them to produce 1.5 cars for each imported vehicle.
Major Chinese companies pushing for the change include BYD, MG Motor, which is owned by SAIC Motor Corp, and Great Wall Motor, Suroj said.
BYD and Great Wall Motor did not respond to a Reuters request for comment.
Seeking the concession is one tactic in a broader push by the EV industry to manage lower-than-expected sales, as part of which they met Thai central bank officials this year.
Narit Therdsteerasukdi, secretary-general of the Thailand Board of Investment, which runs the incentive scheme, declined to comment without receiving guidance from the cabinet of new Prime Minister Paetongtarn Shinawatra.
Thailand has long been a hub for auto making and export, dominated by Japanese brands such as Toyota Motor and Honda Motor, which are also members of EVAT.
The government incentives for EV production aim to spur conversion of 30 per cent of the annual output of about 2 million vehicles to electric vehicles by 2030.
New EV sales this year stood at 43,000 and were likely to miss EVAT’s target of 100,000, Suroj added.
They reflect broader weakness in the Thai auto industry, where car production contracted 17.28 per cent in the first seven months of 2024 from a year earlier to stand at 886,069.
Banks were hesitant to issue EV loans because of deep discounts that hit asset prices, Suroj said.
“High household debt is tightening credit, which is going to make it hard to sell,” he added.
Already among Asia’s highest, Thailand’s average household debt has risen to a record, thanks to slow economic growth, lower incomes and high living costs, a survey showed on Tuesday.
During its June meeting with the Bank of Thailand, details of which have not been made public, EVAT pushed for state banks to provide more auto loans.
“An outcome of that meeting was (that banks) could calculate income as a family or household when considering loans,” said the grouping’s vice president, Siamnat Panassorn.
The central bank did not respond to a Reuters request for comment.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First Published: Sep 11 2024 | 10:15 AM IST
