Advertisement
China-EU relations
OpinionComment
Bob Savic
Chris Dixon
Bob SavicandChris Dixon

Opinion | In Thailand, China’s EV makers have found a refuge from EU subsidy probe

  • Thailand is quickly becoming Southeast Asia’s EV manufacturing hub as Chinese carmakers escaping geopolitical tensions set up shop in the friendly state
  • The EU is unlikely to extend its probe to Thailand and risk alienating ties with a key Asean dialogue partner

Reading Time:3 minutes
Why you can trust SCMP
4
Performers present Hozon NETA V, a Chinese electric car, in Bangkok on August 24, 2022. Hozon Auto is among several Chinese EV makers with plans to set up production in Thailand. Photo: EPA-EFE
Bob SavicandChris Dixon
The European Union’s call to investigate Beijing’s use of state subsidies in the production of Chinese electric vehicles, along with the possibility of tariffs on EV exports to Europe, comes as Chinese carmakers diversify their manufacturing of EVs into Southeast Asia.
Advertisement
Chief among Chinese EV makers’ prospective hubs is Thailand. The country has by far the largest automobile sector within the Association of Southeast Asian Nations, and is luring Chinese EV carmakers under an ambitious government programme titled the “30/30 policy”. According to this three-stage programme, by 2030, about a third of all vehicles produced in Thailand will be EVs.

These ambitious targets should be seen in the context of Thailand’s large and well-established motor vehicle sector, estimated to be 10th in global rankings, the country’s long history of government support in the form of investment incentives, and significantly, local promotion.

The US-China trade war, instigated by the former Trump administration, was likely to have been a major factor in boosting Chinese manufacturing investment in Thailand. In 2019, Chinese manufacturers’ concerns over trade frictions, which was affecting their value chains, catapulted China into becoming Thailand’s largest overseas direct investor, beating Japan for the first time.

Thailand claims that up to US$1.44 billion will be invested by Chinese EV carmakers in the country. Consequently, the next few years point towards a rising inflow of investment from China. While this was initially prompted by trade and political frictions with Washington, there may be further impetus from Chinese EV makers relocating overseas as a result of similar simmering tensions with Brussels. Thailand and the broader Asean region is emerging front and centre in that “de-risking” process.

Advertisement
For Chinese EV producers, Thailand fulfils the role of an alternative platform to manufacturing in China, given its automotive supply chains, skilled workforce and accommodating government incentives. Thailand also has friendly relations with the main geopolitical rival powers. This makes it a prime strategic choice, not only for Chinese companies, but also for US, Japanese and European investors.
Advertisement