Think of Thailand and magnificent temples or beautiful beaches might come to mind. But automobile production? As the largest carmaker in south-east Asia, the regional hub wants to become the same for electric vehicles. China’s CATL could provide the country with a shortcut.
The world’s biggest maker of electric-car batteries, along with its peers, is in talks with the government to build production facilities in Thailand.
Automakers including Toyota and Honda have made internal combustion engine cars there for more than a decade. Toyota now wants to make electric models. South Korean and Chinese electric-car makers including Hyundai, BYD and Great Wall Motors among others hope to do the same.
Car manufacturing accounts for more than a tenth of Thailand’s gross domestic product. The shift to electric had once worried local suppliers. Energy group PTT PCL, the third-most-valuable local company, is one that could lose out in the transition. Its share price is down a fifth in the past year and at 8 times forward earnings trades at a steep discount to regional peers.
But CATL’s strategic collaboration with a subsidiary of the Thai state-owned oil and gas group could make things interesting again for PTT’s investors. CATL holds more than a third of the world’s electric car battery market. It has expanded rapidly outside China in recent years, including into Europe. A German plant started operations in December. But it does not have facilities in south-east Asia.
Thailand had been overlooked in the race for electric-car supply chain production owing to its neighbour Indonesia’s position as the world’s largest producer of nickel — a key material in lithium batteries. Thailand, however, has zinc resources, an ingredient in small disposable batteries but also offering potential for alternatives to lithium-ion batteries.
Thailand’s biggest strength, its decades-long history as a car production hub, will help automakers set up local EV supply chains. If so, capital as well as tourists will flock to the country.