Bangkok: The Thai automotive industry is undergoing a significant transition, shifting from a long-established and strong base for internal combustion engine vehicles to the era of electric vehicles (EVs). New manufacturers, particularly Chinese automakers, are rapidly expanding their markets and production bases throughout the ASEAN region.
According to Thai News Agency, Professor Dr. Achanan Kohpaiboon from the Faculty of Economics, Thammasat University, addressed the challenges facing the Thai automotive industry during the ECON BIZZ by Bancha program on August 25, 2026. These challenges include the tax structure, policies supporting EVs, competition with Chinese cars, and the crucial question of how Thailand should position itself if it wants to maintain its status as a regional automotive manufacturing hub.
One of the key tools the government is using to promote EVs is tax incentives. Thailand has reduced the excise tax on EVs to 8%, with potential further reductions for vehicles meeting EV 3.0 and EV 3.5 support programs. However, Professor Dr. Achanan noted that such incentives could distort the tax structure and affect the competitiveness of long-established internal combustion engine vehicle manufacturers. Designing taxes for the EV era requires considering the impact on the overall industry structure, rather than focusing solely on promoting new technology.
Another challenge is Thailand's ambitious EV production target of approximately 400,000 units within the next 1-2 years, despite current production being less than 90,000 units. This means the domestic market alone may not absorb all production capacity, necessitating reliance on exports. However, export markets present challenges as Chinese car manufacturers have already expanded into various countries in Asia and Oceania, making competition a regional issue. The transition from EV 3.0 to EV 3.5, along with fierce price competition, adds uncertainty to long-term investment plans for businesses.
The establishment of factories by Chinese companies in Thailand and other ASEAN countries raises questions about the sufficiency of such investments to generate long-term economic benefits. Professor Dr. Achanan observes that while there are numerous projects investing in critical parts, concerns remain about whether these investments are sufficient to produce high-quality parts and create added value domestically. The distribution of factories across ASEAN faces challenges related to economies of scale, and if investments focus on importing components for assembly without building supply chains, the benefits to the host country may be limited.
The rapid expansion of the Chinese automotive market has drawn attention to government subsidies and price competition, raising the risk of retaliatory measures such as anti-subsidy or anti-dumping tariffs. For Thailand, the risk lies in competing with imported Chinese cars and the possibility of Chinese companies relocating their assembly plants to Thailand. Without a strong domestic supply chain, Thailand could face trade measures from destination countries.
Professor Dr. Achanan suggests that Thailand should avoid focusing too much on supporting any single technology or adopting a "pick a winner" approach, as automotive technology constantly evolves. Establishing appropriate environmental standards and adjusting the tax structure to balance existing and new businesses is crucial. Evaluating manufacturers using a portfolio approach that considers domestic production, job creation, and supply chain development could contribute to the long-term advancement of Thai industry.
Competition in the ASEAN EV market is not just about the number of cars sold but about attracting investment that creates real economic value within the country. For Thailand, the transition to EVs presents both opportunities and risks. Policies focused solely on increasing sales or attracting factories without building a domestic supply chain and manufacturing capabilities may not suffice for long-term competitiveness. The key question is how much real value the EV industry will leave in Thailand once vehicles roll off the production line.