BYD (BYD), China's leading electric vehicle manufacturer. (European News Agency)
[Compiled by Lu Yongshan/Comprehensive Report] As Chinese automakers move to Thailand to set up factories in large numbers, the market share of Chinese electric vehicles in Thailand has surged from almost zero four years ago to more than 80%. Thai think tanks have said that the negative impact on Thailand is more serious than originally thought, and it is now paying the price. Thailand’s experience also shows that opening the door to Chinese electric vehicles may have unintended consequences.
The New York Times reported that over the past five years, China's electric vehicle leader BYD has built its first overseas factory in Rayong, Thailand's automobile manufacturing center, covering an area equivalent to 180 football fields. About 30 kilometers south of the plant, Great Wall Motors took over a factory once operated by General Motors of the United States.
Prior to this, the dominant players in Thailand's auto market had been Japanese auto companies. They began setting up factories in Thailand in the 1960s, establishing supply chains, and turning Thailand into the "Detroit of the East." Today, the market share of Chinese car companies in Thailand's electric car market has surged from almost zero four years ago to 85%. Japanese car companies are struggling due to their delay in going electric. In 2024 and 2025, Subaru and Suzuki Motors will successively close their factories in Thailand, while Nissan Motors and Honda Motors will reduce production.
This has led to the bankruptcy of some Thai auto parts suppliers that rely on Japanese car companies, threatening a supply chain that employs nearly 700,000 workers.
Supavud Saicheua, chairman of the National Economic and Social Development Council (NESDC), a think tank affiliated with the Prime Minister's Office of Thailand, said: "This all happened much faster than we expected. We did not consider the overall situation at the beginning, and the negative impact on Thailand was far more serious than we expected."
Thailand's experience also shows that opening the door to Chinese electric vehicles can have unintended consequences, a lesson that may resonate elsewhere, especially the European Union and the United States.
The Thai government is trying to control the influx of Chinese electric vehicles. In September this year, it announced a graded tax system that levies the highest tax rate on car companies that have no local production plans and purely imports vehicles, and the lowest tax rate on car companies with a high proportion of local parts procurement.
However, Ruth Banomyong, a professor of supply chain management at Thammasat University in Thailand, said that there is little evidence that Thailand has benefited from opening up China's massive import of electric vehicles, because Chinese car companies operate in a "closed ecosystem" and the core technology is still controlled in China, making it difficult for Thai companies to break into their supply chain.
According to statistics, in the first seven months of this year, about two-thirds of electric vehicles sold in Thailand were imported vehicles, mainly from China.
In addition, Tossohol Kunsri, one of the largest labor unions in Thailand and chairman of the Thailand Automobile Workers Congress, said that Chinese electric car companies refuse to form unions and often sign short-term contracts with workers. After completing short-term production, they fire workers without paying severance pay. In contrast, Japanese car companies and labor unions maintain a mutually respectful relationship and are willing to negotiate with the union on annual salary increases and bonuses.
Tosopon pointed out that he has complained to the Thai government about the labor rights violations of Chinese electric vehicle companies, and the Minister of Labor has agreed to launch an investigation.
