Foxconn and Thailand PTT sign electric vehicle joint venture agreement to start production as early as 2023

Thai oil and gas group PTT signed a joint venture agreement with Foxconn on Sept. 14 to jointly produce electric vehicles and promote the Thai government's strategy to turn Southeast Asia's second-largest economy into the region's top electric car manufacturer and exporter, according to foreign media reports.

Thai state-owned companies PTT and Foxconn hope to start producing electric vehicles and related parts as early as 2023. Auttapol Rerkpiboon, president and CEO of PTT, said in a statement that the investment will help Thailand become the center of electric vehicle production in Southeast Asia. He also expects the two sides to start producing 50, 000 electric vehicles a year within two to three years, and to increase annual production to 150000 in the future. The new joint venture will invest $1 billion to $2 billion over the next five to six years to build a factory and an R & D facility in Thailand's eastern economic corridor.

In the new joint venture, Arun Plus, a wholly owned subsidiary of PTT, will own 60 per cent of the shares, while Lin Yin, a wholly owned subsidiary of Foxconn, will own the rest. The new company is expected to complete the registration process in the fourth quarter of 2021.

Thailand's car industry sprang up in the 1960s, when Japanese carmakers entered the country and set up factories there. Later, after the Asian financial crisis in 1997, Thailand began to become a car manufacturing and export center in Southeast Asia. The automobile industry has created a large number of jobs for the country and provided the country with the technology to help Thailand's economic development.

At present, the automobile industry is turning to electrification, and the Thai government does not want to lose its position as the automobile production center of Southeast Asia. The country's new Automobile Commission has set a bold goal of increasing zero-emission car sales to 30% of Thailand's total sales by 2030. The committee also plans that 50 per cent of Thailand's car production will come from pure electric vehicles by 2030. In order to develop the infrastructure of electric vehicles, the Thai government also approved an investment incentive for the charging and replacement of electric vehicles in mid-May this year.

In addition to PTT and Foxconn, Chinese carmaker Great Wall opened its first Thai plant in the Eastern Economic Corridor in June, focusing on producing electric cars for Thailand and Southeast Asian markets.

Japanese brands such as Toyota, Nissan and Honda account for 90 per cent of the Thai market, while emerging players such as PTT and Foxconn are likely to shake up the Thai car market. Although established car companies such as Toyota see the potential of electric vehicles, they are not very active in shifting their production from fuel-powered vehicles to electric vehicles.

Compared with fuel vehicles, electric vehicles have fewer mechanical parts, so electric vehicles are a relatively easy market to enter. Compared with emerging companies, established car companies face higher difficulties in the transition to electric vehicle production, because the process can lead to the loss of jobs in some mechanical parts manufacturers. But the good news is that electrification can create more jobs for electric parts makers and IT service providers.

According to a study released in February by Frost & Sullivan commissioned by Nissan, 66 per cent of consumers in Southeast Asia think they will use electric vehicles in the near future.