Thailand automotive sector faces risks from Chinese EV dominance and supply chain shifts

The automotive and manufacturing sectors in Thailand face significant structural challenges as the country's economic landscape shifts toward Chinese influence. While Thailand's export statistics show growth, domestic factory utilization rates have dropped to approximately 60%. This discrepancy is attributed to a heavy reliance on foreign-owned companies, particularly in the high-tech and AI sectors, and a sharp increase in the import of components from China. The local content rate for these firms has fallen to 30%, limiting the economic benefits for the domestic supply chain.

Concerns are rising regarding the impact of Chinese electric vehicle (EV) manufacturers on the local industry. While EV sales are increasing, much of the critical technology and battery components are imported, which may not foster long-term domestic technical expertise or employment. Industry leaders have warned that if the government does not implement stable, long-term policies focused on technology transfer and infrastructure, major manufacturers like Toyota may consider relocating production to competitors like Indonesia, which is actively courting investment.

Simultaneously, China's broader economy exhibits a growing imbalance between robust foreign trade and weak domestic demand. While exports of high-tech goods like semiconductors and AI-related products have surged, China remains heavily dependent on importing high-end equipment and components. This “two-sided external” pattern—relying on foreign markets for sales and foreign sources for critical technology—increases vulnerability to geopolitical shifts and global supply chain fluctuations.