Thailand Requires EVs to Use More Local Parts, Will Chinese Brands Be Affected?

In recent years, an increasing number of Chinese car brands have entered Thailand to set up factories, driving the rapid growth of the local electric vehicle (EV) market. However, as Chinese brands continue to expand investment, Thailand's automotive industry is now proposing new demands, hoping the government will further increase the "local content rate (Local Content)" of electric vehicles, requiring factories to adopt more locally produced parts in Thailand to ensure the local supply chain can continue to develop.

According to Thai media reports, the Federation of Thai Industries (FTI) and the Thailand Automotive Industry Association (TAIA) recently jointly urged the government to formulate more complete local parts policies in the future, encouraging or even requiring electric vehicle manufacturers to prioritize components produced by local suppliers when manufacturing in Thailand, rather than relying heavily on imports.

Currently, including Chinese brands such as BYD, Great Wall, MG, AION, and Changan, have already set up production bases in Thailand, and some models have even started CKD assembly locally. However, industry observers point out that many key parts are still imported from China, making it difficult for traditional Thai auto parts suppliers to truly benefit.

FTI Chairman Suwat Supakandechakul stated that Thailand already has the capability to produce many auto parts, including car seats, wiring harnesses (Wiring Harness), windshields, and other products, and local suppliers are fully capable of meeting factory needs. If these parts can be prioritized for Thailand manufacturing, it not only reduces overall production costs but also allows the local parts industry to gain greater development space.

In addition, he also suggested that the government could provide tax incentives (Tax Deduction) and other reward measures for factories with a higher proportion of local parts used, further encouraging factories to increase their localization rate, and even hoped that in the future, even high-value parts like chassis (Chassis) could be gradually realized for local production.

Besides supporting the local supply chain, Thailand's automotive industry also worries about the continuous changes in the international trade environment. Industry observers point out that the US has continued to strengthen inspections on "transshipment (Transshipment)" in recent years. If products exported to the US have most parts still from China and only assembled in Thailand, they may face stricter tariff inspections in the future, even affecting export competitiveness.

Therefore, increasing the proportion of local parts usage can not only strengthen Thailand's automotive industry competitiveness but also help reduce future international trade risks. On the other hand, the Thailand Automotive Industry Association (TAIA) also submitted several suggestions to the government, including adjusting the consumption tax policy for imported electric vehicles (CBU) to protect the local manufacturing industry.

At the same time, the association also suggested that the government could provide individual income tax incentives for consumers who purchase Thai-assembled cars, encouraging more consumers to choose locally produced models. In addition, government departments should also prioritize Thai-assembled electric vehicles when procuring official vehicles in the future to further drive market demand.

In fact, Chinese brands have invested heavily in Thailand in recent years, not only driving the location to become one of the most important EV production bases in Southeast Asia but also attracting a large number of related industries to move in. However, for the Thai government and local industries, the true goal is not merely to attract factory setup, but to hope these investments can further drive local supply chain growth, benefiting more Thai parts factories, component suppliers, and related employment opportunities.

If the government formally promotes stricter localization policies in the future, Chinese brands will inevitably need to further expand cooperation with local Thai suppliers and increase the proportion of parts procurement, which may become an important direction for Thailand's EV industry development in the future.

It is worth noting that this policy currently still belongs to suggestions proposed by industry groups to the government, not formal regulations. However, with Thailand continuing to promote automotive industry upgrades, whether more clear localization standards will be formulated in the future will become the focus of major factory owners.