Up to 1,700 local auto parts manufacturers are being assisted in shifting to producing parts for electric vehicles (EVs) under a new agreement between the Federation of Thai Industries (FTI) and global car manufacturers.
The manufacturers are familiar with making components used in the production of internal combustion engine (ICE) cars, which are gradually being replaced by EVs amid campaigns to promote zero-emission cars.
The FTI is trying to help the auto parts manufacturers team up with automakers from Japan, Europe, the US and China under a cluster under FTI Future Mobility-ONE (CFM-ONE), a unit aimed at supporting the development of Thailand’s automotive industry.
Chinese car manufacturers are rapidly developing EV and battery technologies, as well as expanding their investment in the country.
“The FTI has joined hands with seven Chinese EV manufacturers to support and help [Thai] auto parts companies transform their ICE-related technology into one that suits EVs,” said Suphot Sukphisarn, chairman of the FTI’s Auto Parts Industry Club and secretary of CFM-ONE.
He said the federation and Chinese car companies have agreed to help auto parts producers develop and improve their technology and their businesses.
Most of the 1,700 companies are small and medium-sized original equipment manufacturers, categorised as tier 2 and tier 3 in the auto parts supply chain.
Auto parts producers in tier 1 are usually subsidiaries of global car companies.
“These 1,700 companies supply 1.9-2 million components to ICE car manufacturers. Up to 70% of the auto parts are needed for the production of pickups while the remaining 30% are used for passenger cars,” said Mr Suphot.
The government has a policy requiring 70% of auto parts used by ICE car manufacturers to be produced locally.
The entry of Chinese EV manufacturers into the Thai market caused grave concern among local auto parts manufacturers as the Chinese firms not only sell EVs but are also developing their own auto parts supply chain.
The FTI is urging the government to support auto parts companies and manufacturers producing ICE-powered vehicles by seeking markets that still require regular ICE-powered vehicles.
“Though the world is campaigning for net-zero targets, we believe there must be countries that still need ICE cars rather than battery EVs,” said Mr Suphot.
“The government must identify those countries and speed up talks on free trade agreements.”
According to the FTI, the automotive industry makes up 11% of the country’s GDP and accounts for 750,000 jobs.
Thailand is the world’s 10th-largest manufacturer of ICE-powered vehicles. The country exports cars to more than 170 countries.