レポート・報告書
アジ研ポリシー･ブリーフ
No.264 The Rise of Battery Electric Vehicles in Thailand
Chawalit Jeenanunta, Yasushi Ueki
PDF (244KB)
- Exponential Growth: BEV registrations in Thailand have surged from under 6,000 units in 2021 to over 140,000 units in 2025, driven by the "EV 3.0" subsidy incentives.
- Structural Shift: The entry of Chinese automakers has disrupted the legacy Japanese-dominated supply chain, introducing a "Vertical Integration Import" model that threatens local Tier 2 and Tier 3 suppliers.
- Policy Crossroads: The government must pivot from "capacity" (subsidies for assembly) to "capability" (knowledge transfer and localization for value-creation) to prevent industrial hollowing out.
Rapid expansion of the BEV market
Thailand's automotive industry is navigating its most profound transformation in sixty years as the nation moves away from its traditional reliance on internal combustion engines (ICE). While the country remains the "Detroit of Asia" and holds a prestigious production rank of 10th globally, its domestic market was historically defined by the dominance of 1-ton pickup trucks. However, government incentives have catalyzed a dramatic shift in consumer behavior, leading battery electric vehicle (BEV) registrations to experience an exponential surge from under 6,000 units in 2021 to over 140,000 units by 2025. This increase signifies a fundamental market pivot where BEVs are transitioning from a specialized niche into a common passenger car choice. A significant milestone occurred at the 2025 Motor Expo, where Chinese brands secured 56.8% of total bookings, remarkably surpassing the 36.8% held by established Japanese legacy brands. This shift is largely fueled by aggressive pricing strategies that have achieved price parity between BEVs and ICE vehicles, fundamentally altering the value proposition for Thai buyers.
This behavioral change is underscored by a notable drop in pickup truck registrations, a critical market indicator driven by the fact that diesel prices are no longer heavily subsidized. With diesel costs rising, BEVs have become a more financially viable option for many families due to their reduced running costs. However, this rapid growth has introduced a clash between two distinct industrial philosophies. The Japanese Model focuses on long product cycles of six to seven years, prioritizing incremental improvements known as Kaizen, reliability, and guaranteed parts availability for over twenty years. In contrast, the Chinese Model operates with a "Tech Company" mindset, featuring rapid iteration cycles of only three to four years, frequent software updates, and high-frequency model refreshes. This acceleration creates substantial uncertainty for Thai consumers regarding long-term resale values and the risk of "orphan models" that may be discontinued without technical support after only a few years. Furthermore, aggressive price wars have led to extreme market volatility; for instance, the BYD Atto 3 saw a price reduction of over 40% within a single three-year cycle, creating a deflationary mindset where potential customers delay purchases in anticipation of even further price cuts.
Policy framework: The "30@30" catalyst
The explosion in BEV sales volume is the direct consequence of the National Electric Vehicle Policy Committee's "30@30" vision, which aims for Zero Emission Vehicles (ZEVs) to constitute 30% of domestic production by the year 2030. This strategic initiative marks a pivotal turning point in national industrial strategy, aiming to reduce domestic carbon emissions while future-proofing Thailand's status as a premier export hub. The framework was primarily enacted through the EV 3.0 Subsidy Package, which provided direct subsidies of up to 150,000 THB ($4,800 as of Jan. 2026) per vehicle and slashed excise taxes from 8% down to just 2%. To ensure that Thailand remains a production hub rather than just an import market, these incentives are tied to strict supply-side conditionality. Manufacturers who imported Completely Built-Up (CBU) vehicles under the subsidy program were contractually required to commit to local production at a 1:1 ratio, which escalates to a 1:1.5 ratio if production targets are delayed.
While this successfully attracted direct investments by Chinese firms, it creates a structural risk of overcapacity; if domestic sales fail to meet expectations, manufacturers remain obligated to produce high volumes to satisfy their subsidy agreements, potentially leading to inventory stockpiles. Thailand’s current success is built upon a historical foundation of "Product Champion" strategies, including the 1960s Complete Knock-Down (CKD) kits, the 1980s localization policies reaching 54%, and the 2005 pickup hub scheme. The current EV Era represents the third major initiative, supported by non-fiscal measures such as Time-of-Use (TOU) electricity tariffs for off-peak hours (10 p.m. to 6 a.m.) to reduce the total cost of ownership for users.
Supply chain implications: The "vertical integration" challenge
While sales volumes flourish, the industrial base faces an existential "hollowing out" risk. The fundamental challenge lies in the dramatic reduction of mechanical complexity: an ICE vehicle requires approximately 30,000 parts, whereas a BEV requires only about 3,000. This tenfold reduction renders entire categories of components obsolete, specifically impacting manufacturers of engines and transmissions. Data indicates that 816 companies and over 326,400 workers are directly affected by this transition, with manufacturers of engine-related parts accounting for 51% of affected firms. Many new Chinese entrants employ the "Vertical Integration Import" strategy. Unlike Japanese manufacturers who spent decades building local capacity, Chinese firms tend to replicate their established domestic supply chains abroad.
This manifests through the use of satellite suppliers, where Chinese OEMs encourage their own component makers to establish factories in Thailand that often function as simple assembly points for imported sub-components. Consequently, legacy Thai Tier 2 and Tier 3 suppliers, who lack the intellectual property for specialized EV parts, are increasingly bypassed and excluded from the new value chain. A primary industry survey conducted in 2024 revealed that Japanese OEMs remain the leaders in supply chain integration, sharing long-term forecasts and conducting frequent Quality Assurance audits. In contrast, Chinese OEMs operate on more transactional, short-term cycles with minimal technology transfer to local firms, which risks turning Thailand into a simple assembly base rather than a value-added hub. The transition is also creating an existential crisis for car dealerships. For decades, traditional Japanese dealers relied on after-sales maintenance for their gross margin, but BEVs require significantly less mechanical repair, effectively eliminating this critical revenue stream. This has forced dealers to pivot toward high-volume sales and direct-to-consumer models, which reduce inventory holding costs but create a much more volatile business model.
Policy recommendations: From encouragement to enforcement
To ensure the long-term sustainability of Thailand's status as a global automotive hub, government policy must evolve from "capacity" to "capability" regarding knowledge transfer and localization. First, the government must enforce strict localization rules by tightening the definition of "local content" to include the genuine manufacturing of core components. Second, Board of Investment incentives should be explicitly tied to technology transfer programs that encourage new entrants to partner with and upgrade existing local Tier 2 and Tier 3 suppliers. Third, targeted supply chain support must be directed toward helping legacy ICE suppliers transition to EV-compatible parts. Finally, the government should implement non-fiscal adoption stimulants to drive organic demand as subsidies phase out. Failure to adapt these policies could result in Thailand losing its hard-won status as the "Detroit of Asia" and becoming a mere assembly and import market for foreign technology.
The Thai automotive industry is like a venerable clockwork machine built over sixty years, where every gear was hand-crafted to work in perfect harmony. Now, the industry is switching to a digital smartphone model, which is faster but made of sealed, imported parts. If the government doesn't teach local craftsmen how to manufacture microchips and screens, the entire village of craftsmen will eventually have nothing to do but polish the cases of devices designed elsewhere.
(Chawalit Jeenanunta, Sirindhorn International Institute of Technology, Thammasat University, Thailand;
Yasushi Ueki/ IDE Bangkok Research Center, JETRO Bangkok, Thailand)
The views expressed in the document are those of the author(s) and neither the Institute of Developing Economies nor the Japan External Trade Organization bears responsibility for them. ©2026 Author(s)