Interview: Mercedes-Benz Manufacturing (Thailand)

Mercedes-Benz supporting Thailand to become Asia’s clean mobility hub

Axel Bense, Chief Executive Officer of Mercedes-Benz Manufacturing (Thailand)

Mercedes-Benz has been investing in the production of plug-in hybrid electric vehicles (PHEVs) in Thailand and gearing up for the launch of battery electric vehicles (BEVs) in the local market. This exclusive interview with Mr. Axel Bense, Chief Executive Officer of Mercedes-Benz Manufacturing (Thailand), focuses on Thailand’s electric vehicles industry and how the German company will help Thailand to become a hub for next generation automobiles. Mr. Bense is overseeing the assembly of PHEVs and the production of Mercedes-Benz EV batteries in Thailand.

- Electric vehicles are gaining popularity worldwide. Is Thailand still in the early stage of adopting EV technology?

The fact that the EV infrastructure in Thailand is still in its infancy probably the reason why full EVs have no market share, unlike in Europe. One of the fastest ways to push the market is with government support for building an extensive EV infrastructure such as more charging stations.

In Europe, there are government-supported high-speed charging stations in public areas where EVs can be charged for free. EVs can be also charged at home. This type of incentive will certainly encourage growth of the Thai EV market. Actually, Thailand is ASEAN’s leader in terms of automobile sales volumes; thus, the EV market here is developing. Thailand is also positioning itself as the regional EV leader. Certainly, the number of internal combustion engine (ICE) cars will decrease during the next seven years.

Mercedes-Benz has initiated a “Charge to Change” campaign to raise awareness of EVs. We are ready to facilitate full EV production, including batteries. The campaign aims to encourage plug-in hybrid users of all automobile brands to take part in reducing the amount of PM 2.5, simply by daily charging. We also aim to make Thailand the clean mobility hub of Asia.

- What is the current demand for PHEVs among Thai and other Association of Southeast Asian Nations (ASEAN) customers in comparison to Europe?

In terms of the EV industry, South-East Asian countries are very far behind China and Europe. Vietnam, Malaysia and Thailand are at about the same level. Since we start marketing PHEVs in Thailand in 2016, we have definitely seen the growth. Next year we will introduce fully electric vehicles to the Thai market. However, we need the government to do more to support the infrastructure. It does not help much if there are not sufficient charging stations for customers.

We consider our PHEVs to be the world’s number one because they account for about half of all our vehicles sold worldwide.

- What are the key challenges faced by EV manufacturers that could result in the hesitation among potential buyers? How will Mercedes-Benz overcome these challenges?

One of the challenges is charging time, which depends on the type of cars and charging stations. If you have a charging station that provides 11 kilowatts per hour, basically it will take the whole night to charge an EV. On the other hand, a high-power charger will take just 45 to 50 minutes to provide power to drive as far as 200 km. In the future, there may be high-power stations that can recharge an EV in 15 minutes for a 250 km drive.

Noise has been one of the challenges. However, in building luxury cars with good interior design, style and interactive communication, we have overcome that challenge.

Mercedes-Benz started the development of hybrid vehicles in 2013. Our “Charge to Change” campaign is aimed at encouraging the change to EVs. We have initiated charging facilities at many hotels who are our business partners, such as the Marriott Hotel and Anantara Hotel group, accounting for more than 85 per cent of five-star hotels.

We have established more than 120 charging stations around Bangkok in co-operation with related government agencies such as Electricity Generating Authority of Thailand (EGAT). Apart from Mercedes-Benz cars, other plug-in hybrid vehicles such as MG and BMW can also be charged at the facilities. This will reduce pollution such as PM 2.5 and help in expanding the infrastructure.

- The Covid-19 pandemic is still severe in Thailand. How will it affect the adoption of EV technology by the Thai market as well as in your production?

So far we have not had any major production stoppages due to Covid-19, and no delays in terms of shipment or parts supply. I’m quite sure that the showroom visits are less than two years ago. I would say it has changed the business and how we do it, but it has not changed our performance.

In our factory, only 10-20 per cent of the employees work from home, depending on the production situation. We have to provide team members with certain IT infrastructure to be able to handle the work. However, everything is developing in a positive direction. In the first wave of the pandemic, elderly people like me hated virtual meetings; However, we are now used to it. In terms of productivity, our production is proceeding as planned for this year. However, if Thailand’s overall economy, especially in the tourism sector, does not recover soon then most likely the slowdown will harm us during the next 3-5 years or maybe even in the long term.

I think all businesses and entities have adapted to the situation very quickly. On the other hand, the government’s process is slowing down, such as issuing licences that we need. The level of the adaptation on the government’s side is not at the same level as the business/private sector.

“We are working with the government on ways to support the market, including the transfer of technology, employee skills, charging infrastructure and battery testing facilities.”

- What is the key feature/advantage of German technology in EV/PHEV production and use?

Every electric vehicle has a different approach. I can say that our current plug-in EVs in the market can be driven more than 100 kilometres per charge, with the GLE model as market segment leader. It is the same with our plug-in hybrid vehicles, which are leaders in terms of efficiency, with a similar range of a combustion engine. We are also market leaders in terms of rapid, high-power charging. Another feature that customers will appreciate when driving EVs is the low noise level, which is less than that of our competitors’ vehicles because we have devoted much effort in engine development. Our PHEVs also run smoothly.

- Why did Mercedes-Benz choose Thailand to be its manufacturing site?

Mercedes-Benz has been already established in the Thai market. Our objective was to manufacture cars close to our customers and be present in the market with not only ICE cars but also electric vehicles. We are committed to battery production in Thailand and we try to keep costs as low as possible.

Our Samut Prakan factory output is currently for the domestic market. As we are committed to providing cars in local markets, we have production facilities in Vietnam, Malaysia, Indonesia and Thailand. We have no intention of changing this arrangement; however, we frequently review our strategy.

The number of our employees is based on our product portfolio growth and the growth of overall production. We focus on efficiency, and battery production will therefore increase our labour force.

- What is the Mercedes-Benz future plan for manufacturing in Thailand?

Thailand’s EV market is dependent on the establishment of the necessary infrastructure by the government. While we can produce EVs locally, we hope that exports will be allowed without duty to make EVs more competitive in the future.

Next year we will introduce the first full electric vehicle to the market here. In fact, many new products are lined up for next year, including the new C Class car. EVs will account for a higher percentage of production in the foreseeable future.

Our focus is on the next generation of the S Class, the first fully EV and the next generation of the C Class. Most likely the percentage of our market share will remain the same. The S class, C class and E class are our main sales volume, as they account for 50 per cent of all units sold and they all feature a plug-in hybrid model. Our GLC model, the compact S, the C segment SUV and the GLE also include a plug-in hybrid.

- What are your suggestions to the Thai government for accelerating EV industry growth?

We need a comprehensive government policy for supporting EVs. Other countries have put much effort into the transition of the automobile industry to EVs, mainly due to climate change and environmental protection. Automotive manufacturers have made considerable investments in the development of new generation cars. We need the support of the government which also supports environmental protection and environmentally-friendly mobility. Therefore, quick and reliable action by the government is crucial.

Second, the government needs to ensure that local production is competitive, and not just rely on imports from China. This need should be discussed clearly and openly so that everyone is aware of future conditions concerning full local production and imports of EVs.

The governments of Germany and other countries with high EV growth support electrification of transport. For example, they support private charging stations. Thus, regulations need to be established in Thailand to enable investment by private entities, as Mercedes-Benz and other EV manufacturers cannot provide charging stations for the whole country.

By focusing support on local production, it is clear the government would like to see investment in zero-emission vehicle manufacturing. Therefore, we need a comprehensive approach by the government that includes the demand side in order to motivate customers to buy EVs. A sustainable infrastructure and reasonable costs are also important in building customer confidence. What if they buy EVs but the infrastructure is not extensively available yet?

We are working with the government on ways to support the market, including the transfer of technology, employee skills, charging infrastructure and battery testing facilities. In 2018, for example, Mercedes-Benz collaborated with the National Science and Technology Development Agency of Thailand on battery testing. We will also expand co-operation in other related areas to support EV technology in Thailand.

However, regulations to support local production and ensure flexible investment are needed. If tight protocols are set by the government, it could create difficulties for attracting investors.

Interview by Chadaphan Maliphan, GTCC Publications and Communications Manager