Future mobility: The EV roadmap for Thailand

Suriyong Tungsuwan and Varutt Kittichungchit

It is difficult to deny that with numerous technological disruptions during the past decade, the automotive industry is one of the most disrupted. With the acceleration of advanced device and sensor technologies and AI embedded systems, the current generation of automobiles have become much “smarter” with these technological advancements.

Challenges and disruptions in the automotive industry boil down to the acronym “CASE”, which stands for Connected cars/Autonomous driving/Shared mobility/Electrification – four potentially major trends linked to the evolution of the industry. The new trend of CASE may take another decade or two before maturity, but we can safely say that a new age of vehicles has dawned.

Looking at Thailand, the CASE trend has been well-recognised both by the public and private sectors, and the government has been working for some time on developing relevant laws. Some of these laws include:

• Amendment to the regulations regarding permission for use of radio communication equipment for radar systems in vehicles in early 2018, to ensure the safety of using transmitter devices with certain frequencies in automated vehicles;

• Designation of “next-generation automotive” development as the first category of targeted industries granted several types of investment privileges under the Eastern Special Development Zone Act (commonly called the EEC Act) enacted in May 2018;

• The Board of Investment’s (BOI) official notification to implement its new investment promotion scheme for electric vehicles (EVs) and related businesses. EVs are charging ahead

Of the four components of CASE, EVs seem to be accelerating at a greater speed, both globally and in Thailand. For automated vehicles, some of the greatest hurdles lie in the legal and local regulatory framework and industry standards, which have yet to be developed. Having said that, some promising trends have been seen that give a strong push towards the reality of autonomous cars in several jurisdictions, notably the United States, the European Union and Japan. As for Thailand, the related AI law and Internet of Things (IoT) legal frameworks, which underpin autonomous and connected vehicles, are still at the development stage; however, they have shown consistent progress.

Earlier this year, the Ministry of Higher Education, Science, Research and Innovation, in collaboration with the Ministry of Digital Economy and Society, set up a task force to work on the drafting of Thailand’s national AI model plan for further approval by the Cabinet.

A promising outlook for EVs is that global EV sales are forecast to grow 50 per cent or more next year. Many European countries and China have announced plans to phase out internal combustion engine cars within the next 15-20 years. EVs are also seeing the most robust and promising developments in Thailand.

Outlook for EVs in Thailand

The automotive industry plays a vital role in Thailand’s economy. As Thailand has thrived through recent decades to become the “Detroit of Asia” with its global ranking of eleventh among vehicle manufacturing countries, in 2020 the Thai government initiated a national roadmap to transform Thailand into an EV manufacturing country as well as to establish the country as a low-carbon society. The roadmap has recently been reviewed and revised to increase the target numbers of EVs to be manufactured in Thailand as well as to shorten the timeline to achieve such a goal. Under the latest roadmap (as of May 2021), at least 30 percent of vehicles manufactured in Thailand will be EVs by 2030.

In addition, domestic development of EVrelated infrastructures, such as charging stations and centres for testing EV batteries, eco-friendly battery recycling and disposal as well as a plan to restructure the excise tax regime for the early-stage (1-5 years) EV promotion scheme have also been included in the roadmap.

As for Thailand, the related AI law and Internet of Things (IoT) legal frameworks, which underpin autonomous and connected vehicles, are still at the development stage; however, they have shown consistent progress.

In terms of investment promotion, EVs were previously promoted by the BOI under a promotion package that expired in 2018 and which covered only passenger cars and buses. Under that package, the BOI approved 26 EV projects, of which seven have started commercial operations.

However, in November 2020, the BOI announced a new investment package to promote EVs, which recently came into effect. This time the package is broader in scope, in termsof the types of vehicles and parts that are covered. Also eligible for investment promotion are the manufacturing of parts and equipment for electric vehicles and the manufacturing of high-energy density storage batteries, with production of a cell/ module or pack assembly process.

Other than promoting manufacturing of EVs and EV parts, the BOI is also promoting EV charging station businesses. Incentives include corporate income tax exemption for five years and exemption from import duties on machinery.

The future of the automotive industry is more exciting and promising than ever with CASE. For Thailand, given the developments favourable to EVs, as mentioned above, the future of this sector definitely looks bright.

Contact details: Suriyong Tungsuwan, Head of the Industrials, Manufacturing and Transportation, Baker McKenzie (Bangkok office), suriyong.tungsuwan@bakermckenzie.com

Varutt Kittichungchit, Associate, Baker McKenzie (Bangkok office), Varutt.kittichungchit@bakermckenzie.com