In Depth: Chinese EV-Makers Lured by Thai Perks Face Reality Check

The Thai auto market has undergone a significant transformation over the past three years, marked by the rapid and aggressive entry of Chinese carmakers. Once dominated by Japanese brands like Toyota and Honda, Thailand now hosts at least nine active Chinese automotive firms, whose presence is visible on everything from highway billboards to city streets, with dealerships located in close proximity to long-established Japanese competitors. This influx was propelled by favorable Thai government policies offering generous industrial subsidies for electric vehicle (EV) purchase and production, which coincided with heightened competition in China and ambitions among Chinese firms to expand globally, using Thailand as a strategic base. However, a key stipulation of the subsidy—requiring automakers to manufacture locally as many cars as they import—has created surplus supply at higher costs in a shrinking market.[para. 1][para. 2][para. 3][para. 4][para. 5]

Consequently, the market has become highly saturated, mirroring the conditions in China, with fierce price competition prevailing. Despite the increased supply, Thai car sales have slumped, with just 572,675 new vehicles sold in 2023, a year-on-year decline of over 25%. Pure EV sales, while growing, still comprised under 67,000 units. With the country’s auto market experiencing a downturn due to high household debt, companies now vie for a smaller but highly contested pie. Industry leaders describe this as a “deep red ocean” scenario—an intensively competitive environment.[para. 5][para. 6][para. 7]

Having dominated Thailand for decades, Japanese automakers are facing strong challenges. At the 46th Bangkok International Motor Show, Chinese brands showcased not just their technological advancements—like safety features and flashy designs—but also innovative marketing tactics. As a result, Chinese firms like BYD, SAIC MG, and Changan drew large crowds, and half of the top-10 brands by order volume were Chinese, with BYD securing the first spot ahead of longtime leader Toyota. This marks a major turning point, with at least 16 Chinese marques now competing in Thailand.[para. 8][para. 9][para. 10][para. 11][para. 12][para. 13][para. 14]

Chinese automakers’ primary advantages are advanced technology and aggressive pricing. Their EVs are packed with features previously only seen in luxury vehicles, such as full LCD dashboards, advanced infotainment, and rapid charging, sold at steeply discounted prices—BYD’s Dolphin price was slashed by nearly 40% in two years. In contrast, Japanese cars are perceived as lagging technologically, prompting some Japanese firms to cut back local production or close factories.[para. 15][para. 16][para. 17][para. 18][para. 19]

For consumers, the abundance of affordable, high-tech Chinese EVs has shifted purchasing preferences away from traditional Japanese sedans. Many Chinese models priced around 600,000–700,000 baht come with standard features that Japanese rivals only offer in cars over 1 million baht. EVs are also notably cheaper to run and maintain, and are not as affected by Thailand’s high temperatures, bolstering their appeal. In 2023, pure EVs captured nearly 12% market share, with Chinese brands controlling 80% of it.[para. 20][para. 21][para. 22][para. 23][para. 24][para. 25][para. 26]

The government’s strategy—especially subsidies under the “EV3.0” program, with up to 150,000 baht in incentives—has resulted in major investments. Yet, the production quota tied to the subsidies has led to overcapacity, with Chinese factories in Thailand capable of producing over 550,000 cars per year, almost matching annual national sales, intensifying price wars and squeezing margins. Some newer entrants now export vehicles rather than manufacture locally to avoid high investment commitments.[para. 27][para. 28][para. 29][para. 30][para. 31][para. 32][para. 33][para. 34]

Chinese automakers initially viewed Thailand not just as a market but a springboard for regional exports. However, this strategy is now constrained by Thailand’s higher production costs—about 20% more than China’s—and intensifying competition from neighboring countries with their own EV policies, such as Indonesia. Thus, while Thailand remains pivotal, its role as a regional hub for Chinese EV production faces increasing challenges.[para. 35][para. 36][para. 37][para. 38][para. 39][para. 40][para. 41][para. 42][para. 43][para. 44]

In summary, Thailand’s automotive market is in flux, with Chinese brands rapidly advancing, Japanese incumbents struggling to adapt, and the government grappling with the consequences of its aggressive EV promotion policies amid market saturation and regional competition.[para. 1-44]