Rising competition in electric vehicles tests Thailand's domestic manufacturing ambitions from China
Thailand's electric vehicle (EV) market is currently experiencing a period of intense competition, primarily due to the spillover effects from China's highly competitive EV sector. This fierce rivalry has taken a toll on Chinese EV brands, such as Neta, which entered Thailand's market in 2022 but has since seen its market share dwindle.
Neta's struggles have been compounded by the bankruptcy of its parent company, Zhejiang Hozon, in China. The brand is now grappling with weak sales and difficulties in meeting the Thai government's stringent local production requirements tied to incentive programs. Under the extended scheme, local EV production in 2024 should be 1.5 times the number of imported vehicles.
The Thai government introduced a program where automakers could receive exemptions from import duties only if they matched imported EV volumes with locally produced ones by 2024. However, slowing sales and credit tightening have made it challenging for carmakers, including Neta, to meet these targets. As a result, the government extended the production matching deadline into 2025 with an even stricter 1.5-to-1 production ratio to prevent oversupply and price wars.
Neta's inability to meet local production quotas has led to withheld government payments and a series of complaints from dealers seeking recovery of over 200 million baht (about $6.17 million) in unpaid debts and support promised for showrooms and after-sales service. Some dealers have even stopped ordering new vehicles and are pursuing legal action against the company, highlighting the operational and financial distress within the brand.
Despite these challenges, the Thai government continues to emphasize its commitment to developing the EV sector as part of its ambition to make EVs 30% of its auto production by 2030. Over $3 billion in investments have flowed from Chinese EV makers, attracted by tax breaks and subsidies aimed at boosting local production.
Authorities and industry insiders urge caution, noting that Neta's difficulties underscore the risks of overreliance on foreign brands amid hyper-competition. Siamnat Panassorn, vice president of the Electric Vehicle Association of Thailand, states that Neta's issues are company-specific and do not reflect flaws in Thai policies or the market.
In summary, the hyper-competitive environment prompted by China's EV overcapacity and cutthroat rivalry is currently challenging Thailand’s EV ambitions and local production plans, with smaller Chinese EV brands like Neta bearing the brunt of this spillover effect. The Thai government remains committed to promoting policies supporting the EV industry and related technologies, despite the setbacks experienced by Neta.
| Aspect | Current Status | |-------------------------------|----------------------------------------------------------------------------------------------------------| | Market Competition | Hyper-competition from Chinese EV makers, especially dominant BYD, squeezing smaller brands like Neta | | Neta’s Market Performance | Market share plunged from 12% in 2023 to 4% by mid-2025; new registrations down 48.5% YoY | | Government Incentive Program | Local production requirements extended to 2025 with harsher ratios (1.5:1 production to import ratio) | | Impact on Neta | Struggles to meet production quotas; unpaid debts to dealers; dealership lawsuits ongoing | | Thailand’s EV Goals | Despite setbacks, gov’t remains committed to EV production targets (30% by 2030) and incentives continue | | Broader Implications | Neta’s issues seen as cautionary for policymakers about risks from China’s competitive EV market spillover |
- The current state of Thailand's EV market is characterized by intense competition, primarily due to the spillover effects from China's highly competitive EV sector.
- China's EV overcapacity and cutthroat rivalry are challenging Thailand’s EV ambitions, as evidenced by the plunging market share of brands like Neta.
- Neta, a Chinese EV brand that entered Thailand's market in 2022, has seen its market share dwindle and is grappling with weak sales.
- Slow sales and credit tightening have made it challenging for Neta, and other carmakers, to meet the Thai government's stringent local production requirements tied to incentive programs.
- The Thai government introduced a program that exempts automakers from import duties if they match imported EV volumes with locally produced ones. However, Neta's struggles to meet these targets have led to withheld government payments and dealers seeking recovery of over 200 million baht in unpaid debts.
- The Thai government remains committed to promoting policies supporting the EV industry and related technologies, despite the setbacks experienced by Neta.
- Authorities and industry insiders urge caution, noting that Neta's difficulties underscore the risks of overreliance on foreign brands amid hyper-competition.
- Despite Neta's challenges, the Thai government continues to pursue its ambition to make EVs 30% of its auto production by 2030, with over $3 billion in investments flowing from Chinese EV makers to Thailand.
