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9 Oct 2023

Econ Digest

BEV sales are set to accelerate in 2023 and 2024 in contrast to total car sales


       Although the overall automotive market in Thailand is facing numerous challenges, particularly more stringent lending criteria, sales of battery electric vehicles (BEVs) are set to increase substantially in 2023 and 2024, led by passenger BEVs, which is thanks to the EV 3.0 measures that have induced various carmakers to invest in and tap into the Thai market. However, whether domestic BEV sales in 2024 will surpass projected sales in 2023 may rest with many factors, particularly the EV 3.5 measures.
        The year 2023 is considered to be a year of substantial growth for the Thai BEV market, driven primarily by the EV 3.0 package implemented in 2022 that has helped induce carmakers to invest and introduce their BEVs in Thailand. KResearch thus projects that domestic BEV sales in 2023 will reach up to 68,0000 units, an increase of 405%YoY, accounting for 8.6% of Thailand’s total car sales. In 2024, the gradual entry of new BEV manufacturers in Thailand will likely help reinvigorate the market, with total sales projected to reach 85,000 units in the base-case scenario. Although BEV’s share of the Thai automotive market is projected to increase to 10%, its growth may fall 25%YoY, pending clarity of the government policies, particularly the details of the EV 3.5 measures and the timing of their implementation. If the government policies remain unclear, then BEV sales will substantially be affected during 1Q24. Nevertheless, if the government decides to implement the EV 3.5 measures in early 2024 and their conditions continue to induce BEV makers to market their products here, it is expected that domestic BEV sales in 2024 will surpass our prior estimates. Preliminarily, KResearch is of the view that domestic BEV sales may reach 100,000 units during 2024, an increase of 47%YoY, in the best-case scenario.   
        Meanwhile, it is expected that the domestic passenger BEV market will thrive ahead. For 2023, the share of passenger BEVs is projected to increase to 17% of the total passenger car sales and then to 21% in 2024. Over the next 1-2 years, passenger BEVs priced at THB1 million and higher will likely be most sought as compared to other types of passenger cars, as seen from the fact that more carmakers are beginning to penetrate this market. Presently, roughly 60% of the total passenger BEVs sold in Thailand are in this price range. Most BEV buyers tend to have high purchasing power, including those opting to purchase a BEV as a second car. Companies and taxi service providers are also increasingly turning to BEVs. Looking ahead, passenger BEVs priced less than THB1 million have the potential to gain more market share when the related ecosystem in Thailand has improved and consumers have increased confidence and begun purchasing a BEV as their first car.
         Although BEV sales in Thailand are projected to accelerate, economic issues in the country, especially hefty household debt and the fact that financial institutions have begun to tighten their lending criteria, have led KResearch to project that domestic car sales in 2023 will contract 6.0%YoY to 795,000 units (during 8M23, total car sales reached only 524,784 units, a contraction of 6.0% YoY), before growing to 810,000 units or an increase of 2%YoY in 2024, supported by the government’s economic stimulus measures.
        Looking ahead, although BEV sales are projected to record a substantial growth, thanks to the proactive marketing campaigns launched by BEV makers, attractive prices as a result of government support, and outstanding car body features, close attention must be paid to a number of issues. These include that the number of public charging points may not increase in line with the BEV sales, representing another restriction to bolster mass market sales in the future. To help support steady growth in the BEV market, the government must place priority on offering incentives for the expansion of charging stations as EV batteries used in Thailand have not yet been developed for long-distance travelling and fast charging.

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