Analysis: China's intense EV rivalry tests Thailand's local production goals

Straits Times

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On June 20, Zhejiang Hozon New Energy Automobile, the owner of Neta, officially entered bankruptcy proceedings.
BANGKOK, Thailand – Hyper-competition in China's electric vehicle (EV) sector is spilling over to Thailand – its biggest market in Asia – as smaller players struggle to compete with dominant BYD, putting ambitious local production plans at risk.
Neta, among the earliest Chinese electric vehicle (EV) brands to enter Thailand in 2022, is an example of a struggling carmaker finding it difficult to meet the requirements of a demanding government incentive programme meant to boost Thai EV production.
Under the scheme, carmakers are exempted from import duties but
obligated to match import volumes with domestic production in 2024. Citing slowing sales and tightening credit conditions, carmakers asked the government to adjust the scheme, and the 2024 production shortfall was rolled over into 2025.
Neta has said that it cannot produce the required number of cars locally and that the government has withheld some payments to the EV maker, said Excise Department official Panupong Sriket. He received a complaint filed in June by 18 Neta dealers in Thailand seeking to recover more than 200 million baht (S$7.9 million) of allegedly unpaid debt.
The complaint, a copy of which was reviewed by Reuters, also detailed missed payments by Neta related to promised support for building showrooms and after-sales service.
Neta dealership owner Saravut Khunpitiluck said: 'I stopped ordering more cars in September because I sensed something was wrong. I'm currently suing them.'
Neta's parent company, Zhejiang Hozon New Energy Automobile, entered bankruptcy proceedings in China in June, according to Chinese state media.
Neta and its Chinese parent did not respond to Reuters' requests for comment.
Market share decline
Neta's share of Thailand's EV market peaked at around 12 per cent of EV sales in 2023, when the industry was growing, according to Counterpoint Research data, with BYD having a 49 per cent share that year.
In Thailand, a regional auto production and export hub, Chinese brands dominate the EV market with a combined share of more than 70 per cent.
The number of Chinese EV brands has doubled in the last year to 18, placing pressure on those that lack the reach of BYD, which has taken over from Tesla as the world's biggest EV maker.
In the first five months of 2025, new registration of Neta cars – a proxy for sales – slumped 48.5 per cent from the prior year and its share of EV registrations was down to 4 per cent, according to government data.
'Neta's downturn in Thailand reflects the fragility of second-tier Chinese EV brands both at home and abroad,' said Mr Abhik Mukherjee, an automotive analyst at Counterpoint Research.
'Intense price competition and the scale advantages of dominant players have made survival increasingly difficult for smaller companies, particularly in export markets, where margins are slim and robust after-sales support is essential.'
In Thailand, Neta's biggest international market, it sells three models, with the cheapest Neta V-II Lite priced at 549,000 baht before discounts, compared with market leader BYD's entry-level Dolphin model, which is priced at 569,900 baht.
Thailand's domestic auto market has become increasingly competitive amid a sluggish economy.
'Some Chinese brands have slashed prices by more than 20 per cent,' said Mr Rujipun Assarut, assistant managing director of KResearch, a unit of Thai lender Kasikornbank.
'Pricing has become the main strategy to stimulate buying.'
China's EV overcapacity and price war have pushed carmakers to expand abroad, but markets such as Thailand are now mirroring the same hyper-competitive pressures, exposing smaller firms to similar risks.
No confidence
Three years ago, Thailand unveiled an ambitious plan to transform its car industry – long dominated by Japanese majors like Toyota and Honda – to ensure at least 30 per cent of its total auto production was EVs by 2030.
The country, which exports about half of its auto output, has drawn more than US$3 billion (S$3.8 billion) in investments from a clutch of Chinese EV makers, including Neta. They were partly lured to South-east Asia's second-largest economy by the government incentive scheme.
'Neta's case should give Thai policymakers pause,' said Mr Ben Kiatkwankul, a partner at Bangkok-based government affairs advisory firm Maverick Consulting Group.
In December 2024, after a sharp sales contraction, Thailand's Board of Investment gave EV makers an extension to the initial local production timeline, to avoid oversupply and a worsening price war.
Under the original scheme, local EV production in 2024 was required to match each vehicle imported between February 2022 and December 2023, or the carmaker would incur hefty fines.
Car manufacturers avoided those fines with the extension carrying over unmet production into 2025, but at a higher ratio of 1.5 times imports.
Thailand's Board of Investment did not respond to a Reuters request for comment.
Mr Siamnat Panassorn, vice-president of the Electric Vehicle Association of Thailand, said Neta's issues were company-specific and did not reflect flaws in Thai policies or the market. But external shocks, including geopolitical tensions and the spectre of higher tariffs, have added to the pressure felt by the sector, he added.
For Thai Neta dealers such as Mr Chatdanai Komrutai, the crisis is deepening. The brand's car owners have taken to social media in droves to share maintenance issues and limited after-sales support, and a consumer watchdog agency is inspecting some of those complaints.
'Selling cars is difficult right now,' he said. 'There's no confidence.' REUTERS