Thailand’s shift to promote electric commercial vehicles a boon for local assembly
[BANGKOK] A new scheme by the Thai government that gives domestic bus and truck fleet operators incentives to encourage them to switch to electric vehicles (EVs) is picking up some steam.
This package of incentives, which expires at the end of 2025, allows companies that buy electric commercial vehicles manufactured in Thailand to deduct expenses amounting to twice the price of the vehicles. The rate is one-and-a-half times for imported models.
The scheme is thus more attractive for local manufacturers of these EVs, of which two are already receiving tax privileges from Thailand’s Board of Investment (BOI). The BOI is a government agency under the Office of the Prime Minister that encourages investment in Thailand by offering incentives to eligible companies.
The first of the two manufacturers is Energy Absolute (EA), which is listed on the Stock Exchange of Thailand. EA owns several solar and wind power plants that in 2018 diversified into the production of electric cars, ferries, buses, pickups and trucks.
The second is Sakun C Innovation – the vehicle marketing arm of Thailand’s leading automotive parts supplier Choknamchai Group – which currently manufacturers aluminium body electric minibuses and other vehicles for niche markets.
Thailand – the second-largest economy in South-east Asia – has been providing generous tax incentives to local manufacturers of electric passenger cars since 2017.
This initiative has seen considerable success, especially among Chinese brands, seven of which will start assembling their EV models in Thailand this year. Great Wall Motor started production of its Ora Good Cat model in January this year.
Over the past decade or so, Thailand has promoted the switch to EV production as a means to retain its status as an auto manufacturing and export hub, and to attract new foreign direct investment to the high-tech sector.
The government has set a goal for local vehicle production – including private cars, motorcycles and commercial vehicles – to reach 30 per cent of EVs by 2030. This is part of the country’s broader goal to be carbon-neutral by 2050 and to achieve net-zero greenhouse gas emissions by 2065.
Thailand is also offering financial assistance to EV battery makers to set up battery cell manufacturing and battery storage systems.
“We realise that our EV production in Thailand is not big enough to attract battery production,” said BOI secretary-general Narit Therdsteerasukdi. “That’s why we decided to expand the scope of our EV promotion to cover not only EV cars but also EV trucks and buses,” he told reporters in Bangkok.
Thailand’s domestic bus and truck market is considerable, with an average of 100,000 new registrations of buses and trucks per annum in the pre-Covid period.
“The market is there,” said Amorn Sapthaweekul, the deputy chief executive officer of Energy Absolute.
EA – which opened a 1 gigawatt-hour lithium-ion battery plant in Thailand in 2021 with technology from Taiwan’s Amita Group – has had a head start in the electric bus market in Bangkok, via robust sales to its subsidiary Thai Smile Bus, which runs 123 routes in the capital and neighbouring provinces.
There are now only two main public bus operators in Bangkok – the state-owned Bangkok Mass Transit Authority, which has a fleet of 3,000 ageing buses; and Thai Smile Bus, which has about 3,100 buses on the roads.
Previously, there were about 60 private operators of bus routes in Bangkok, but the pandemic forced the bulk of them to sell their licences to EA.
EA – which reported 23.1 billion baht (S$857.3 million) in revenue last year, with profits of 7.6 billion baht – predicts that half of its 2024 revenue will come from EV sales.
Stock analysts said they are watching EA’s sales closely this year, as they will demonstrate if EVs made in Thailand can hold their own against imported and much cheaper electric buses and trucks from China.
Amorn said EA had to drop its plan to manufacture an electric passenger car due to tough competition from established overseas brands. The company faces a similar fate with its electric pickup truck models, as Japanese automotive giants Toyota and Isuzu are both launching electric pickups in Thailand later this year.
The electric commercial vehicle market, however, may prove different, said Amorn.
“Brand loyalty in the bus and truck market is less than it is in the passenger car market,” he said. “The window is still open for new brands.”
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