Kiatnakin Phatra Securities stated in its analysis that Thailand’s automotive industry, a major contributor to the nation’s economy, is encountering significant structural adjustments as battery electric vehicles (BEVs) rapidly gain market share. This transformation is raising concerns about the sector’s future competitiveness and the broader economic impact, particularly as traditional internal combustion engine (ICE) vehicle production declines.
The automotive sector in Thailand accounts for roughly 10-12% of gross domestic product, 35% of total manufacturing output, and provides 16% of manufacturing jobs. The nation’s longstanding dependence on ICE vehicles, especially pickup trucks with 70-80% local content, is being challenged by a swift rise in new energy vehicles. These newer models utilize less than 30% local components, reducing value capture for the domestic supply chain.
BEV adoption has risen sharply, growing from 1.6% of all new car sales in 2022 to 18.2% in 2025. When pickup trucks are excluded, the figure climbs to 27.8%. This shift is not solely due to an increase in BEV sales, but also the result of a quickly shrinking ICE vehicle base—a factor responsible for one-third of the growth in BEV market share. The trend toward more affordable vehicles, alongside the contraction of certain market segments, has driven this change rather than robust organic demand for BEVs.
Sales of BEVs have been largely underpinned by a consumer move toward less expensive models, as purchasing power has declined. Passenger car segments priced above one million baht have experienced double-digit decreases, signaling reduced capacity for consumers to spend on higher-end vehicles. Subsidies and substantial price reductions in the BEV segment have helped position these vehicles 15-30% below comparable ICE models, further incentivizing a switch to BEVs.
Pickup trucks—a backbone of the Thai auto industry—have struggled to return to previous demand levels. The segment, which makes up about 70% of pickup demand in rural areas, has been hit the hardest by ongoing affordability challenges and tightening credit conditions outside urban centers. This decline has weakened the dominance of one-ton pickups in Thailand’s vehicle market.
Looking ahead, BEV penetration is expected to keep growing due to a sustained price advantage over ICE models, despite the recent increase in BEV prices after the phase-out of EV 3.0 subsidies. BEV costs are nonetheless anticipated to decrease again as household incomes stagnate, credit standards remain strict, and manufacturers face pressure to meet BEV production targets. Chinese automakers, benefiting from domestic subsidies and large manufacturing scale, have more flexibility to cut prices further, likely supporting ongoing BEV market gains.
However, the shift to BEVs and the resulting reduction in local content value threaten to erode industry margins. This environment of narrowing profitability could weigh on manufacturing output, limit consumer spending, deepen deflationary trends, and slow overall economic activity. The continuation of these dynamics may prolong the affordability concerns that have shaped the current market transition.
