Friday, May 20 2022 | ASIA TODAY INTERNATIONAL - Reporting the Business that Matters in Asia
Can tomorrow’s supercell drive Thailand forward?
CAN the Detroit of Southeast Asia become the Tesla of Southeast Asia? There are multiple challenges ahead as Thailand retools for the future . . .
BANGKOK - The goal is ambitious. Last year, Thailand produced a grand total of 4,799 electric vehicles (EVs), barely enough to cause a small Bangkok traffic jam.
Now, Prime Minister Prayut Chan-o-cha has set a daunting national target: all 18 million vehicles manufactured in the Kingdom by 2035 must be electric-powered.
Automotive assembly was a cornerstone for Thailand's rapid industrialisation. By the 1980s, the sector was so robust, particularly for exports, that the Kingdom was known as the Detroit of Southeast Asia.
But times have changed. Does ASEAN's second-largest economy have the technological grunt to become the Tesla of Southeast Asia?
The ultimate answer is crucial in determining the sustainability of Thai industries. The car assembly and car parts industry accounts for nearly 12% of Thailand's economic growth and employs more than 500,000 people.
The sector is dominated by Japanese carmakers that have made Thailand their production base for one-ton pick-up trucks and "eco-cars" for export.
But most vehicles produced in Thailand are still petrol-powered, and Thailand isn't known as a hub for innovation. The Government is trying to change that.
Thailand's 20-year national economic strategy, Thailand 4.0, envisions a more advanced and green economy built on research and development, creativity and the embracement of new ideas and higher-tech.
To realise this vision, the Administration is targetting 12 sectors for support and investment. One of the most essential is next-generation vehicles -- EVs.
Some of the big multinationals are already on board. Mercedes-Benz has taken pole position, having assembled hybrid plug-in EVs at its Thai plants since 2016. BMW followed suit.
Toyota, Honda, and most other major carmakers began building hybrids at their plants in Thailand as early as 2009.
Nonetheless, Thailand remains a long way from the one million EVs that Prime Minister Prayut wants to see on Thai roads by 2025.
Some Western executives even say that Japanese manufacturers have been lobbying against what they see as an overly speedy switchover.
"They have invested heavily in internal combustion vehicle assembly in Thailand, and they want to protect their investments,'' says Peter van Haren, a former chairman of the joint foreign chambers of commerce in Thailand.
Thailand has been attractive to global carmakers for several reasons, including its extensive logistics networks and its free-trade agreements with Australia, China, India, New Zealand, and the 10 member states of ASEAN.
Another reason is that it has never developed a national car, such as Malaysia's Proton, to compete against those made by foreign investors.
But now, a mostly State-owned conglomerate is moving into the EV business. PTT Group, the partially-privatised State energy firm, announced last year that it will enter the vehicle assembly business.
PTT, in fact, made its first foray into the industry in December by launching G-Cell, Thailand's first semi-solid battery cell for EV and home use.
At the end of May, PTT announced that it had formed a partnership with Foxconn, the Taiwan-based assembler of iPhones and other mobile devices, to build an EV assembly business in Thailand.
PTT said it plans to assemble various types of EVs, including motorcycles, sedans, buses and trucks.
The company did not say, however, whose vehicles it would be assembling. Earlier this year, it did unveil a domestically-made electric motorcycle.
With Foxconn on board, the new venture will most likely follow Foxconn's (mobile phone??) model and assemble EVs for various global carmakers.
For EVs to be attractive to Thai buyers, infrastructure is needed - and that appears to be on the way. PTT established a subsidiary in February to begin building a network of charging stations and to manufacturing chargers for home use.
Meanwhile, Mercedes has committed to manufacture EV batteries in Thailand.
"We have begun marketing our plug-in hybrid EVs in Thailand, and have invested to produce lithium-ion batteries, says Frank Steinacher, Mercedes vice-president for sales and marketing.
"It would not make sense if we did not also bring our battery EV technology to the country."
In March, Florida-based EVLOMO said it planned to roll out a network of EV chargers across Thailand. EVLOMO said its charging stations will be easily accessible through an integrated platform solution on mobiles using IoT and AI technology.
But Thai companies are also determined to compete. In April, Global Power Synergy, a Thai power producer for industry that has been moving into renewables, signed an agreement with nine partners to develop a prototype common car battery pack and a battery-swapping system, using GPSC's Semi-Solid technology or G-Cell for battery electric vehicles such as electric motorbikes, Tuk Tuks, and cars.
The technology will enable battery swapping at EV charging stations in the future, the company said.
Another consortium of Thai companies and agencies intends to build a nationwide network of charging stations.
Yotsaphong La-Nuan, president of the Electric Vehicle Association of Thailand, said the consortium intends to build 1,854 charging points at filling stations around the country.
But every evolution has winners and losers.
Many Thai businesses in the automotive sector are parts manufacturers. EVs require fewer parts, so a significant number of local businesses may not survive.
Some are retooling to produce other types of goods. Others are engaging in their own limited research and development to find ways to better serve clients.
Thailand is unlikely to generate a Tesla-style firm, but it is embracing new technologies, and the chances are high that, especially with the PTT and Foxconn partnership, the Kingdom will be able to sustain its role as a vehicle assembler of choice in the Asia-Pacific region.