Thailand built one of Southeast Asia’s strongest automotive industries around internal-combustion vehicles and Japanese manufacturers. Now Chinese electric vehicle (EV) investment is bringing a different generation of automakers and technologies into the country. A significant share of the parts Thailand already makes could still be used in EVs, but suppliers will have to adapt to new technologies and different ways of working.
For decades, Thailand built its position as one of Southeast Asia’s leading automotive hubs around internal-combustion-engine vehicles, Japanese manufacturers and a deep local supplier network.
Now the industry is changing. EV sales and production are rising, new factories have opened and Chinese automakers have become a major presence in the market.
Thailand produced 1.455 million vehicles in 2025, down 0.9 percent from a year earlier. Production of ICE passenger cars fell 29 percent to around 248,000 units, while battery-electric passenger vehicle output more than doubled to about 71,000.
BEV registrations rose by roughly 53 percent to 147,500 vehicles, while Chinese brands accounted for 88 percent of EVs sold in Thailand in 2025, according to BloombergNEF data cited in a recent Asia Carbon View briefing.
Thailand has made EVs an important part of its automotive strategy. Its 30@30 policy targets zero-emission vehicles at 30 percent of domestic vehicle production by 2030, while the EV3.0 and EV3.5 programmes have helped attract manufacturers by combining consumer incentives with domestic production commitments.
Dr. Yossapong Laoonual, Associate Professor of Mechanical Engineering at King Mongkut’s University of Technology Thonburi and a co-founder and former president of the Electric Vehicle Association of Thailand, said the country had succeeded in the first phase of attracting EV manufacturing investment.
More than 10 brands are now producing BEVs in Thailand and more than 100 EV models are available in the market, he said during an Asia Carbon View webinar in September 2026.
Yossapong sees EVs as the first step in the next generation of mobility, with connected, autonomous and smarter vehicles likely to follow.
Thailand now needs to develop more of these capabilities locally.
Connecting the auto industry Thailand has with the expanding EV
Thailand already has a large automotive industry to build on. Its automotive base has developed over decades, particularly around Japanese manufacturers and ICE vehicles. Pickup truck production is deeply localized, with localization reaching close to 90 percent in some cases and including local research and development (R&D), according to Yossapong.
But EV manufacturing requires some different technologies and suppliers. Many components are still imported, particularly from China. Yossapong said Thailand needs to develop local capabilities in battery systems, power electronics, electric motors, software and vehicle controls, as well as strengthen human capital and R&D.
The next step, he said, is to move from “investment attraction to capability and value creation.”
But many of Thailand’s existing suppliers could remain part of the EV supply chain. A February 2026 World Bank report cited in Asia Carbon View’s briefing found that more than 80 percent of auto-parts sales in Thailand could continue to serve EV production. Around 58 percent were considered unaffected by the transition, while another 19 percent would require only limited modification.
Body structures, interiors, brakes, suspension and basic electrical components, for example, continue to have roles in electric vehicles. Suppliers tied more closely to engines, fuel systems, exhaust systems and related components face a more difficult transition.
A significant share of the parts Thailand already makes could remain relevant to EV production. The issue is whether suppliers can adapt and whether Thailand can build the new capabilities EV production requires.
Geng Kang, Managing Director of CirCulture Development (HK) with over a decade of experience in the China operations of top-tier American and European automakers, said the two systems of ICE and EV vehicles have different engineering practices, sourcing models and ways of working. “They don’t speak the same engineering language,” he said.
Chinese automakers expect suppliers to meet demanding requirements on speed, quality and cost. Thai companies seeking to enter their supply chains may need new technology, financing and technical capabilities.
Yossapong has seen some Thai SMEs begin to explore new areas. He pointed to companies working with business partners on high-speed electric motorcycles to serve the gap in Southeast markets.
Policy can attract factories, but domestic capability takes longer
Thailand’s EV policies have played a central role in creating demand and bringing manufacturing investment into the country.
China’s experience, Geng said, shows both what industrial policy can do and where its limits lie.
“Policy buys your time. It doesn’t buy your capabilities,” he said.
Tax incentives and localization requirements can encourage production to move into a country. They cannot by themselves create the ability to design, test, validate, improve and service products locally.
Geng said moving from assembly towards a deeper local supply chain could take five to 10 years. “There is no shortcut.”
EV3.5 runs through 2027 and links incentives for imported vehicles to domestic production commitments. That gives Thailand a relatively short policy horizon against the much longer period Geng says is needed to develop industrial capabilities.
What happens after EV3.5 ends will matter. Manufacturers may not simply leave, but local production will still need to make commercial sense once incentives and production obligations change. That will depend in part on scale.
“The scale is the real driver, not the policy. The auto industry is a scale game,” Geng said.
Thailand’s domestic market alone may not be large enough to support deeper localization. Geng said exports to other right-hand-drive markets, including Australia, New Zealand and parts of Asia, could give manufacturers in Thailand the additional scale needed to invest more in local production.
Li Shuo, Director of the China Climate Hub and Senior Fellow at the Asia Society Policy Institute’s Center for China Analysis, also pointed to the regional market. He said that when receiving Chinese investment in the EV sector, Thailand should not just use this opportunity to serve domestic demand. Thailand could also play a role in supplying EVs to other markets in the region.
Local content does not necessarily tell the whole story
Factory numbers and localization rates can show how an EV industry is developing, but they do not necessarily show how much technology and industrial capability has been built locally.
Yossapong cautioned that the way localization is measured does not always reflect how much value is actually being created in Thailand.
Battery cells, for example, may be imported and then assembled into battery packs in Thailand. Some power electronics may also continue to come from overseas.
His point was that the percentage alone tells only part of the story.
Thailand will also need capabilities in battery systems, power electronics, motors, software and vehicle control technologies, alongside research and development and engineering skills.
Its existing automotive industry gives it experience, workers and suppliers to build on. Developing some of the newer EV technologies, however, will require additional investment, skills and closer links on research centers between foreign manufacturers and Thai companies.
The transition also has an energy dimension
Li said China’s manufacturing strength has been built partly on integrated supply chains, economies of scale, consistent policy and access to competitive energy, with a growing share coming from low-carbon sources.
He also expects Chinese automakers to pay more attention to the emissions associated with manufacturing and their supply chains as environmental requirements in overseas markets become more important.
Thailand’s electricity system, meanwhile, remains heavily dependent on fossil fuels.
As EV production expands, the source of the electricity used to manufacture vehicles, batteries and components will matter too. A cleaner power system would strengthen the environmental case for the transition while helping manufacturers respond to pressure to reduce supply-chain emissions.
For Thailand, cleaner electricity will become more important as EV manufacturing expands and pressure grows to cut emissions from vehicle production.
Thailand’s transition could offer lessons for the region
Southeast Asian countries are taking different routes into EVs.
Vietnam has VinFast and has seen rapid growth in electric mobility. Indonesia is using its nickel resources to develop battery and EV production. Malaysia enters the transition with domestic automotive brands including Proton.
Thailand starts from a different position. It already has a large, export-oriented automotive industry built over decades.
That existing industry is an asset. Many of its suppliers can continue making parts for EVs, and Thailand already has workers, engineering experience, infrastructure and export links.
But the country is also trying to connect that established industry with new technologies, new manufacturers and new supply chains.
Thailand’s early EV policies have succeeded in attracting investment and bringing more EV production into the country. What happens around those factories will matter just as much. Existing suppliers will need to adapt, more technology will need to be developed locally, and demand will have to be strong enough to support further investment.
EVs are already changing Thailand’s automotive industry. Some of the strengths built during the ICE era can carry over, but Thailand will also need to develop capabilities it did not have before.
About the briefing and webinar
This analysis draws on Asia Carbon View’s briefing, “Thailand’s EV buildout puts its auto hub ambitions to the test,” and its September webinar, “From EV Assembly to EV Ecosystems: ASEAN’s Next Industrial Opportunity.”
The discussion featured Dr. Yossapong Laoonual, Associate Professor of Mechanical Engineering at King Mongkut’s University of Technology Thonburi; Li Shuo, Director of the China Climate Hub and Senior Fellow at the Asia Society Policy Institute; and Geng Kang, Managing Director of CirCulture Development (HK).
About Asia Carbon View
Asia Carbon View (ACV) is an independent intelligence platform focused on the policy, market, and supply chain shifts reshaping Asia’s industrial landscape.
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