ABeam Consulting (Thailand) shares insights on the current industry situation and Battery Electric Vehicle trends in Thailand.

ABeam Consulting (Thailand) recently held a webinar attended by over 300 participants, during which it shared insights related to industry trends and approaches for Japanese automotive suppliers to adapt to them.

Sales of BEVs have been rapidly growing in Thailand, propelling the country to become a market leader in BEVs in ASEAN, with more than 75,000 new BEVs registered in the country in 2023. The adoption of BEVs has been consistently increasing in Thailand, and the BEV market share reached 16% in December and almost 10% when considering the entire year.

This growth has been fueled by the EV 3.0 incentive package introduced in 2022, which is set to expire by the end of January 2024. However, the government has already passed the EV 3.5 package, which will replace the current incentive package. The new package lowers the amount of incentives per vehicle; nevertheless, it will undoubtedly help drive BEV sales in the country.

From the OEM perspective, the main beneficiaries of the incentives have been Chinese OEMs. Many of them made the decision to use Thailand as a key market for their expansion outside China and are eyeing the country as a manufacturing hub for Southeast Asia. Several Chinese OEMs are in the process of establishing their plants in Thailand, sending a strong message that their presence in Thailand is not temporary and that strong demand for BEVs will continue in the future.

The shift to BEVs and the changing competitive landscape may be perceived as threats for many incumbents in the automotive supply chain. “First of all, ICE components account for about 25% of the cost of a conventional vehicle, and that share is eliminated in BEVs. Secondly, while the BEV powertrain is more expensive, which is good for suppliers, a lot of parts may be imported from China or will be produced by new players in Thailand. This may also extend to non-powertrain parts where new OEMs may find it cheaper to source them from China from their current suppliers or ask them to establish new facilities in Thailand. This, of course, would be problematic for current suppliers in Thailand, especially Japanese suppliers who have very strong relationships with Japanese OEMs,” says Naoto Uzuka, Principal of ABeam Consulting (Thailand).

To better understand what Japanese suppliers can do, ABeam Consulting (Thailand) conducted a series of interviews with Chinese OEMs. The common themes among interviewees were the need for agility, speed, and attractive pricing. “Japanese suppliers need to change their mentality if they want to work with non-Japanese OEMs. They need to think more long-term rather than focus on short-term profit and must increase their flexibility. However, it may be difficult for them to adjust their existing processes. Hence, creating new businesses as separate legal entities focused on nurturing new business relationships may be the best approach. To do so successfully, they will need to identify a visionary business architect and people who can nurture partnerships with Chinese OEMs and suppliers and local Thai conglomerates to make the most out of opportunities that lie ahead,” added Uzuka.