Thailand serves as a key regional manufacturing hub, primarily for Japanese gas-powered cars and pick-up trucks, and is often referred to as the "Detroit of Southeast Asia."

However, the situation for workers in the gas-powered vehicle production sector is challenging.

"Business is bad now," remarked a local motorcycle taxi driver, who lives near a cluster of auto factories and suppliers in eastern Thailand. "Many people have lost their jobs. Factories have shut down. This began during the COVID period when electric vehicles (EVs) emerged, and suppliers for gas-powered cars started to close."

Overall vehicle production dropped by 20% in the first 11 months of the previous year compared to the same period in the previous year.

In 2024, Japanese carmaker Subaru ceased production in Thailand due to poor sales, and Suzuki is expected to follow suit this year. Thailand's weak economy has led banks to tighten criteria for car loans, resulting in fewer consumers purchasing new vehicles.

In contrast, sales of electric vehicles have been performing better than those of gas-powered vehicles. Thailand is placing emphasis on EV manufacturing.

The government has set a target that by 2030, 30% of all vehicles produced in Thailand will be electric. To meet this target, the country requires support from a nation with an advanced EV industry, namely China.

"Thailand is fully committed to attracting Chinese investment," said Pavida Pananond, a professor of international business at Thammasat University in Bangkok.

She explained that the Thai government not only offers tax incentives to EV manufacturers to establish factories but also subsidises prices to make EVs affordable for consumers. Additionally, the government has reduced excise taxes and tariffs on imported EVs.

Chinese EV manufacturers have an advantage over competitors. Under an existing free trade agreement between China and 10 Southeast Asian countries, Chinese cars can be imported into Thailand without tariffs.

In return, Thailand requires EV manufacturers to eventually produce more vehicles locally than they import. EV manufacturers were expected to produce one EV for every vehicle imported in 2024.

However, they missed the production target due to weak sales, and the Thai government agreed to extend the deadline in December, 2024.

Chinese EV makers have invested over US$1.4 billion in Thailand in recent years. Chinese company BYD unveiled a large factory in Rayong province last year. BYD and other Chinese EV manufacturers are eager to explore additional markets, as their vehicles face 100% tariffs in the United States and Canada, effectively preventing entry into those markets.

BYD Thailand declined an interview request but projected the creation of 10,000 jobs. Several BYD workers near the factory, who had no prior experience in the auto industry, stated that they joined the company because it seemed like a trendy opportunity.

A local who left their hotel job to work at BYD as an assembly worker a few months ago, explained, "BYD is a factory producing a new product, and I see opportunities."

Another local who previously worked at Pandora jewellery, joined BYD to work in plastic injection moulding.

"At the time, Pandora was downsizing and offering voluntary redundancy. I took it and moved to BYD because the job seemed more stable," she said.

She noted that BYD offers slightly better pay than her previous factory job - approximately THB 15,000 (US$ 400) a month, though she works six days a week instead of five.

In Chonburi province, a factory jointly owned by China's state-owned carmaker SAIC and Thai conglomerate CP produces mainly gas-powered MG Motor vehicles. The factory began producing an electric model and batteries in 2023. MG Thailand also declined an interview request.

Nearby, strips of Chinese restaurants and massage shops have emerged. Some local Thai businesses are concerned that Chinese investment will not benefit the broader Thai economy.

"These days, I see Chinese people renting shops to do business. Their staff is Chinese, and the customers are Chinese. But Chinese people wouldn't come to shops, like ours, and buy motorcycles," said a branch manager at a motorcycle dealership selling Hondas.

A similar situation could occur in EV manufacturing, according to Pananond.

"Chinese companies may set up their own suppliers and import parts here without creating the supply chain that the Japanese have helped establish in Thailand," she further explained.

The Thai government requires EV manufacturers to source 40% of car parts locally.

However, EV manufacturers have not yet met this target, according to Kriengkrai Techakanont, an associate professor of economics at Thammasat University.

"It's still in its early stages, so most parts are imported. Only a few parts are procured locally at this moment," he stated.

Techakanont expressed no immediate concerns, noting that it took Japanese carmakers decades to localise the supply chain and move more advanced engineering work to Thailand.

Consumers in Thailand are benefiting from the situation. Government subsidies, combined with Chinese EV makers aggressively lowering prices, have made EVs as affordable as gas-powered vehicles.

A local paid THB 700,000 for her BYD model in 2023. She thought it was a fair price until Chinese EV manufacturers began lowering their prices. Thailand's consumer protection agency launched an investigation into BYD's discount practices after complaints from dissatisfied car owners. The firm was reportedly cleared of violating advertising laws, according to local reports.

Today, the same BYD model costs 20% less.

"I feel betrayed," she said. Despite this, the local has not lodged a complaint with BYD, as she is satisfied with the car's performance and the savings on running costs.

"It's more cost-effective than a gas-powered car," she said. "Per month, I used to spend about THB 5,000 on petrol. Now I pay THB 1,500 to charge my EV."

While the local is content with the variety of car choices available, as a salesperson for Japanese gas-powered cars, she is concerned.

"I don't think more Chinese EV investment is a good thing because when Chinese brands come, they cut prices to sell more EVs, which harms the Japanese car industry," she said.

However, the Thai government has limited leverage over Chinese EV makers.

Had the Thai government not engaged Chinese EV makers with its EV policy, Chinese brands could still sell their cars to Thai consumers by simply importing all EVs tariff-free, according to Techakanont.

"If that were the case, what value would be created in Thailand?" he asked.

For now, the Thai government's focus remains on integrating into the global EV supply chain.