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10 Jan 2023

Econ Digest

BEV market...more compelling options, sales in 2023 are expected to double from 2022

         In the future, Battery Electric Vehicles (BEV) may become the first choice of more and more Thai car buyers. … It is important to speed up becoming a production base of battery electric vehicles (BEVs) and increase the coverage of charging piles.

  • The Thai BEV market in 2022 grew exponentially, mainly due to measures to stimulate BEV purchases by offering price discounts. Kasikorn Research Center projects that BEV sales in Thailand will increase to more than 12,000 units in 2022, or at least 6 times more than 2021, and expects sales of BEVs in Thailand to more than double in 2023.
  • However, the main factor driving the purchase of BEVs is still price discounts, coupled with consumers’ concerns about unstable battery technology and inconvenient charging. Therefore, if these sensitive issues are not addressed, it may lead to a slowdown in sales growth after the price discount measures will end in 2025.
  • Therefore, to make the selling price of BEVs competitive with other types of vehicles after the end of the price discount measures, and to create an ecosystem to help consumers have more confidence and convenience in using BEVs, which are still a new technology in the market, the following important support measures should be expedited, i.e. to accelerate the expansion of the coverage of public charging piles with sufficient quantity and ease of use, and to develop Thailand as a production base for all BEV manufacturers selling in Thailand as quickly as possible.

         In recent years, a variety of factors have influenced consumers’ decision to buy a car, in addition to the readiness and economic conditions that affect each car buyer. The COVID-19 crisis is one of the factors that causes people to avoid public transportation in favor of having their own car, but on the other hand, working from home has led to a reduced need to use cars. At the same time, the Russian-Ukraine war has exacerbated supply bottlenecks, leading to shortage of components such as chips, affecting automobile production and waiting periods for car buyers. At present, the effects of the COVID-19 crisis and the chip shortage have alleviated considerably. In addition, the official regulations governing credit facilities have been amended to provide more consumer protection. Although on the whole the decree will not affect the car purchase decision of ready consumers, a small number of buyers will postpone their decision and wait for the clarity of the decree. Additionally, leasing companies will gradually announce their service readiness under the framework of the regulatory rules. The key factor is the arrival of an international BEV brand targeting the Thai market, which will have a significant effect on consumers’ decision to buy a car in the future.

         In the measures announced by the government to support the purchase of BEVs by giving discounts, it sets a condition that automakers must set up BEV factories in Thailand with production volume that can offset all imported cars sales by 2025. As a result, the BEV market in Thailand in 2022 became very lively, prompting BEV registrations in the first 10 months of the year to soar to 7,109 units, a year-on-year increase of 332%. There has been a good acceptance of BEVs in Thailand, especially for the many new Chinese and Western car brands that have just entered the Thai market. Kasikorn Research Center predicts that if car deliveries by automakers can be processed as planned, BEVs sales in Thailand will reach more than 12,000 units in 2022, an increase of at least 6 times from only 1,954 in 2021, and expects BEV sales in 2023 to more than double from 2022.

         The acceptance of BEVs is supported by a survey conducted by Kasikorn Research Center that found that 29% of the respondents would buy BEVs, which was higher than the 2-3% of annual BEV sales that accounted for total annual vehicle sales of about 850,000-900,000 units. Kasikorn Research Center views that the price of BEVs remains the main factor in the purchase decisions, because more than two-thirds of respondents who will buy a BEV express they would do so before 2025, when they can still take advantage of the government price discounts, and most of them will choose Chinese BEV brands that are cheaper than other brands.

        In addition, concerns about unstable battery technology and inconvenient charging are also key issues, with survey results showing that about 48% of car buyers would choose a plug-in hybrid electric vehicle (PHEV), which is the highest proportion as compared to other types of vehicles. Therefore, Kasikorn Research Center believes that in the future, if participants in the BEV market such as automakers and public charging pile providers can reduce the above-mentioned problems, it may encourage car buyers who would originally buy PHEVs to readily switch to BEVs, which are usually cheaper than PHEVs and less complicated to maintain due to significantly fewer parts.

        Therefore, in order for the BEV market to continue to grow in the future, in addition to focusing on the selling price that can compete with other types of vehicles, it is necessary to create an ecosystem that will help car users to have more confidence and ease of access to BEVs, which are still new technologies in the market. That is, to accelerate the development of the following two main factors in the country before the current main measures to stimulate the BEV market end in 2025, namely:

  1. To accelerate the coverage of public charging piles in sufficient quantity and improving their ease of use, because lack of confidence in finding charging piles is the main reason why respondents do not consider buying BEVs, especially for those living in places where wall chargers cannot be installed, such as condominiums and townhouses, so having widespread, adequate and easily accessible public charging remains a necessity.
  2. To accelerate as much as possible in developing Thailand as the production base for BEVs sold in Thailand. This will provide the opportunity to reduce the selling price of BEVs in Thailand in the future due to increased competition among automakers, and not having to pay transportation costs or import taxes for BEV brands that are not manufactured in countries with which Thailand has an FTA. With regard to the concern that the battery technology is still unstable and the cost of battery replacement, although the development of battery technology is an external factor that is difficult to control, it is an official requirement that automakers participating in the BEV market purchase subsidy measures and must also invest in industries related to car batteries in Thailand. Therefore, the more automakers that participate in the measures, the more opportunity there will be for Thailand to develop battery technology and help reduce concerns about batteries in the future. At the same time, the more investment each automaker makes in producing BEVs in Thailand, the more it will reduce the problem of finding replacement parts and possibly indirectly reduce the obstacles caused by insurance premiums.

        In addition, related supply chains such as credit services, insurance, maintenance and the used car market must be developed in parallel, in order to build confidence among consumers interested in using or buying BEVs so that they are not different from other types of vehicles. Ultimately, a good ecosystem will help determine the future of the BEV market and the next generation of the Thai automobile industry.

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