Global State of EV Manufacturing & Supply Chain: Thailand & Mexico

EV, Mexico, supply chain, Thailand

By Dave Chu

Thailand’s EV Manufacturing Supply Chain

  • Regional Hub:
    Thailand is emerging as a regional hub in EV manufacturing, leveraging its strategic geographic location and high logistics performance, particularly in the Eastern Economic Corridor (EEC). The EEC’s comprehensive logistics infrastructure offers optimized connections with major markets like India and China.
  • Investment Opportunities:
    There are significant opportunities for investments in infrastructure to drive EV adoption. Thailand’s automotive assembly activities serve the regional market, and lowered trade barriers through agreements like the Regional Comprehensive Economic Partnership reinforce its position as a regional player in the automotive sector.
  • Challenges and Competition:
    Thailand faces competition from countries like Indonesia in the EV battery sector. Political unrest and potential trade barriers are challenges that need to be navigated. The EV charger manufacturing sector in Thailand also presents opportunities, especially if local players can raise the quality of local products.

Growth and Development

  • Rapid Expansion:
    Thailand’s EV industry has shown fast-paced growth, and projections remain strong for the next few years. This growth is driven by robust investments from both the public and private sectors.
  • Market Value:
    The market value of EV sales was estimated at around 134 million USD in 2020 and is expected to reach approximately 886 million USD by 2025.

Government Initiatives and Policies

  • Government Support:
    The Thai government, through policies and initiatives, is actively promoting EV adoption. Incentives and support range from tax exemptions to the development of national strategies focused on electrification.
  • EV Charging Infrastructure:
    There has been a concerted effort to develop EV charging infrastructure across Thailand, with multiple charging stations operational and more planned for the future.

Foreign Investment and Collaborations

  • Strategic Location:
    Thailand’s strategic geographic location and high logistics performance make it an attractive destination for foreign investment in the EV sector.
  • International Collaborations:
    The country has seen significant foreign investments and collaborations in EV manufacturing, including partnerships with global automotive companies.

Regional Manufacturing Hub

  • Eastern Economic Corridor (EEC):
    The EEC plays a crucial role in positioning Thailand as a gateway to the Southeast Asian market. It also offers optimized connections with major markets like India and China.
  • Competition and Challenges:
    Despite its growth, Thailand faces competition from neighboring countries in the EV sector. Political unrest and potential trade barriers are some challenges that the Thai automotive industry needs to address.

Market Dynamics

  • Product Range:
    The Thai EV market features a variety of models, with a dominance of German and Chinese brands like BMW, Audi, Porsche, BYD, and MG. Chinese brands benefit from a price advantage due to the Free Trade Agreement (FTA) between Thailand and China.
  • Consumer Adoption:
    Consumer adoption of EVs in Thailand is gradually increasing, supported by the government’s initiatives and the growing availability of EV models.

Future Outlook

  • Increased EV Production:
    Thailand aims to increase EV production as part of its broader strategy to become a regional leader in EV manufacturing.
  • Sustainability Goals:
    The focus on EVs is also part of Thailand’s commitment to reducing carbon emissions and transitioning towards sustainable mobility solutions.

Mexico’s EV Manufacturing Supply Chain

Growth in EV Production

Mexico’s EV production is expected to soar by 179% in 2023. This growth is attributed to the influx of new Asian automakers, especially from China. Regions like the Bajío and the northwest are competing to attract foreign investment, spurred by nearshoring trends and the global shift towards electrification in the automotive industry. Mexico’s position as a major automotive manufacturer and its proximity to the US market, bolstered by agreements like the USMCA, make it a strategic location for EV manufacturing.

Mexico’s Automotive Industry

As the seventh-largest automobile producer globally, Mexico’s auto industry has seen significant growth, especially since gaining full access to the US market. In 2022, Mexico produced over 3.5 million cars, of which only about 2% were BEVs. However, a notable increase in BEV production is anticipated for 2023, with projections of over 220,000 electric vehicles, which would be about 7% of the total production.

Electrification Efforts and Investments

Significant investments have been made by major players like Tesla and Tata Group to build gigafactories in Mexico. Additionally, companies like Jetour plan to invest in the establishment of assembly plants specializing in both combustion vehicles and EVs. The focus is not only on vehicle manufacturing but also on battery production and other EV components.

While the market for EVs in Mexico remains small, there’s a noticeable growth in electrified vehicle sales. The popularity of hybrids is evident, but EVs are gaining ground. From 2020 to 2022, the percentage of 100% electric cars among all registered electrified vehicles increased significantly. This trend is expected to continue, with projections of a substantial rise in EV sales by 2030.

Challenges and Opportunities

For Mexico to fully capitalize on the EV market, several factors need addressing, including expanding charging infrastructure, utilizing renewable energy sources, and implementing consumer education and tax incentives. The country’s established capabilities in motor vehicle manufacturing and its strategic location offer significant opportunities for growth in the EV sector.

In conclusion, Mexico’s EV and automobile manufacturing sector is poised for considerable expansion and transformation, driven by increased domestic production, foreign investments, and a growing market for electrified vehicles. The country’s strategic location and manufacturing capabilities position it as a potential key player in the evolving global EV landscape.

Read More:
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