Thailand’s EV 3.0 policy faces major oversupply challenges

The Thai Electric Vehicle Association (EVAT) issued a cautionary note to electric vehicle (EV) manufacturers in Thailand, alerting them to the potential for a significant oversupply of EVs in the coming years. This warning arises from the production requirements stipulated under the EV 3.0 policy.

This policy, which has been previously lauded for encouraging domestic EV production, offers import tax exemptions and other subsidies to EV manufacturers. However, it also mandates a production ratio of 1:1 for imported to locally produced EVs in 2024, and a 1:1.5 ratio in 2025.

EVAT President Krisda Utamote highlighted the implications of this policy today.

“It is estimated that by 2025 EV makers will need to produce 180,000 units to offset the imports… with the low purchasing power in the Thai market, automakers will need to seek out secondary markets to distribute their products or risk suffering losses from oversupply.”

Krisda estimated that the total demand for EVs in the Thai market is around 600,000 units, while the combined production capacity of the seven EV manufacturers in Thailand is approximately 490,000 units. If these factories operate at full capacity, production will surpass 60% of the total demand, potentially leading to an oversupply.

To mitigate this risk, Krisda advised the National Electric Vehicle Board to consider measures such as urging financial institutions to relax loan requirements, thereby enabling more consumers to purchase EVs.

The Excise Department projects that about 185,029 EVs will be imported under the EV 3.0 policy. This includes 84,195 EVs previously imported in 2022 to 2023, and 66,448 in 2024. An estimated 34,386 units are set to be imported in 2025.

The top five companies expected to import the most EVs between 2022 and 2025 are Rever Automotive (77,247 units), Neta Auto (40,837), MG Sales (27,186), Great Wall Motor Manufacturing (24,225), and EV Primus (8,493).

To date, the department has disbursed subsidies for the importation of around 40,000 EVs from a total of 75,000 units. It is now preparing to request a budget of 7 billion baht from the Cabinet to subsidise the remaining imports.

Manufacturers who fail to meet the required domestic production ratios to offset their imports will face penalties, including the return of subsidies and fines amounting to twice the value of the exempted import taxes, reported The Nation.