Thailand
Thailand’s electric vehicle sector to see demand surge amid strong oil prices: DBS
MORE affordable electric vehicle (EV) prices as well as rising crude oil and petroleum prices are set to prompt a surge in EV demand nationwide, according to DBS Group Research.
In a report on Tuesday (Mar 15), DBS said it believed demand for EVs are on the rise due to a combination of environmental concerns, government support and maintenance costs.
Citing data compiled by the Electric Vehicle Association of Thailand, DBS noted that total EV sales have grown by a volume compound annual growth rate of about 20 per cent over 2016 to 2021.
Such demand is set to rise even further, said the research house, given the Thai government’s recent approval of incentive packages for 2022-2023 to encourage the use of both 2 and 4-wheel EVs nationwide.
The packages include import and excise tax cuts, along with subsidies. They are estimated to make EV prices 200,000 to 300,000 baht (S$8,171 to S$12,256) cheaper per unit for car buyers.
DBS analysts believe this latest initiative will increase EV competition in the domestic market as the government’s incentive package will attract overseas carmakers from Europe and Japan.
“With the government package promoting the use of EV, this will both boost EV demand and attract more EV players to Thailand’s EV market,” they said.
Given the current environment of rising oil and petroleum prices – supported by the Russia-Ukraine war and non-Opec supply tightness – the analysts also see a potential shift in demand from internal combustion emission (ICE) vehicles to EVs.
This may be particularly so among gasoline car drivers, they said, as retailed prices for this segment are not subsidised by the government.
DBS projects a 1 to 2.5 baht per km cheaper cost of travelling using EVs in comparison to ICE vehicles.
“Moreover, should the government let the diesel price float – which will surely be to above 30 baht per litre, we expect more demand for EVs given the strong oil price environment,” said its analysts.
Electricity players Global Power and Energy Absolute; auto parts dealer Aapico Hitech; and mid-stream electronic manufacturers Delta Electronics and Hana Microelectronics have been named by DBS as potential beneficiaries for the EV uptrend.
The research house also expects such domestic EV-related players to benefit from programmes that drive up demand for lithium-ion batteries, battery modules, semiconductor chips, spare parts and energy storage systems.
Source: https://www.businesstimes.com.sg/asean-business/thailands-electric-vehicle-sector-to-see-demand-surge-amid-strong-oil-prices-dbs