Electric Vehicle and Electric Vehicle Component Production in Thailand

Publication Type:

Conference Paper


Gerpisa colloquium, Detroit (2020)



Electric Vehicle and Electric Vehicle Component Production in Thailand




Purpose: Thailand transformed herself into a major automotive industry production and export hub after the year 2000. Successful integration into automotive production networks now is perceived as being threatened by the anticipated shift towards electric vehicles. Therefore, Thai automotive sector policy seeks to position the country as a part of the electric vehicle supply chain. The current position of Thailand in electric vehicle (EV) production will be investigated as well as sectoral policy. Policy analysis is framed historically as there are clear path-dependencies in policy design. It will be argued that despite the past success of sectoral policy, the instrument may be inappropriate when targeting more innovative technology.


Design: Regarding sectoral policy towards the automotive industry, the paper adopts a historic perspective in that it incorporates not just recent policy but reviews past policy as a framework to understand recent measures. A comparison of successive policies towards the sector proves useful as there are significant elements of path-dependency in policy design, especially towards what has been called the production champion approach (Natsuda/Thoburn 2013). Morover, even the first iteration of this policy approach followed policies designed in the 1980s analysed by Doner (1991: 202-2018).


As for Thailand’s position in the EV supply chain, trade data are trace her participation in EVs and EV components. Due to limited disaggregation of trade data, only limited insights can be drawn from this exercise. Thus, in addition an investigation into original equipment manufacturer (OEM) and supplier activity in EV and EV parts production in Thailand is conducted.  


Findings: Regarding automotive sector policy, two main findings emerge: First, policy still follows the product champion approach, i.e. policy continues to target specific vehicle types to create economies of scale for suppliers and to steer Thai production into a direction deemed competitive in the future. Second, export data provide evidence that the product champion approach already displayed shortcomings in its second iteration when it aimed at so-called eco-cars, i.e. low fuel-consumption models. Hence, this evidence forces policy-makers to re-evaluate this approach. Third, the most recent iteration of this policy which targets EV demonstrates the limitations of this approach as policy cannot solve the fundamental OEM dilemma of determining which subtype of EV, i.e. hybrids, plug-in hybrids, or battery cars will prevail in competition. As a consequence, policy is less clearly focussed and fails to establish a balance between investment incentives and investment-related performance requirements. Overall, this underlines the well-known issue that industrial policy has clear limitations when technology is changing.


Thailand’s position in the EV supply chain is so far rather limited, e.g. only recently have firms started to assemble EV-grade batteries. However, most if not all material inputs are imported, so that Thailand’s share of value-added is marginal. On the bright side, Honda and Nissan have responded to government policy by choosing Thailand as their declared secondary EV production hubs outside Japan. Thus, Thailand may still be able to defend her position as a major vehicle production hub, even if technology should change faster than commonly anticipated.


Implications: For policy-makers, this study implies that (technology) targeting policies such as the product champion approach have the fundamental limitation that targeting is becoming difficult if various technological options exist. It follows that such industrial policy tools may have to be abandoned or re-combined with more encompassing approaches such as innovation policy to remain viable.


Regarding research methodology, this study highlights significant issues concerning the use trade data for relatively novel technologies. Trade data lack the necessary level of disaggregation to determine important details, e.g. battery trade data only differentiate between cell chemistries, but not between applications. Hence, this suggests that for the time being, studies need to study supply chains at the firm level to investigate emerging supply chains.  






Doner, Richard F. (1991): Driving a Bargain. Automobile Industrialization and Japanese Firms in Southeast Asia. Berkeley: University of California Press.


Natsuda, Kaoru/Thoburn, John (2013): “Industrial policy and the development of the automotive industry in Thailand”, Journal of the Asia Pacifc Economy, Vol. 18, No. 3, pp. 413-437



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