Thailand’s electric vehicle (EV) sales are projected to fall short of targets this year as lenders adopt a cautious approach in approving new auto loans amid soaring household debt, according to an industry association.
Suraj Sangsnit, president of the Electric Vehicle Association of Thailand, reported that new registrations of battery-powered passenger EVs are expected to reach 80,000 units this year, significantly lower than the previously forecasted target of 150,000 units. However, this figure still represents a roughly 5% increase compared to the over 76,000 units sold in 2023.
This downward revision in sales expectations poses challenges for Chinese manufacturers such as BYD and Great Wall Motor, who recently began local production in Thailand following investments in factories to leverage government incentives aimed at promoting new-energy vehicle adoption. Similarly, global EV sales growth has decelerated as demand has softened and many countries have scaled back their subsidies. Earlier this week, Volvo also withdrew its goal of selling only fully electric vehicles by the end of this decade, joining other automakers in lowering their expectations.
The Thai automotive industry association has revised its overall production forecast for all vehicles to 1.7 million units this year, down from an earlier estimate of 1.9 million units, citing a concerning 50% denial rate for auto loans. According to the Federation of Thai Industries, domestic automobile sales have dropped by 24% in the first seven months of the year. In contrast, EV sales have bucked this trend, experiencing a 13% growth during the same period.
Thailand has implemented reductions in import and excise taxes, along with cash subsidies for buyers contingent upon automakers committing to local production, as part of a renewed effort to maintain its status as a regional automotive hub. This initiative led to a sevenfold increase in sales in 2023.
The current slowdown is less about a decline in demand and more related to Thailand’s persistent economic challenges, including sluggish growth and high household debt levels. This situation has resulted in an increase in non-performing loans among vehicle purchasers, leading commercial banks and private finance companies to tighten lending practices.
“It’s not that demand is decreasing, but when loan approvals are not granted, the deal is effectively off,” stated Krisda Utamote, honorary adviser at the EV association. “Our economic outlook is not positive. While EV sales have increased this year, other vehicle types are witnessing a decline.”
The future looks uncertain, with the Bank of Thailand forecasting a further rise in non-performing loans as small businesses and individual borrowers face difficulties in repaying their debts.
“If sales continue to trend this way, who will the EV manufacturers that have established factories here sell to?” asked Suraj during a press conference. “We need to prioritize discussions with the government to address household debt, which is the primary factor causing a drop in auto sales.”
