• Intensive competition among Chinese EV manufacturers is impacting Thailand's local production ambitions.
• Neta, a Chinese EV brand, struggles to meet local production requirements, now facing legal actions.
• Chinese brands collectively hold over 70% of Thailand's EV market, with BYD leading at 49% market share.
• Government incentives aimed at boosting local EV production are under review due to current market pressures.
• Neta's decline reflects broader issues faced by second-tier EV manufacturers internationally.

Hyper-competition in China's electric vehicle sector is spilling over into Thailand, which has become the largest market for these vehicles in Asia. Smaller players, particularly Neta, are struggling to hold their ground against dominant firms like BYD, jeopardizing ambitious local production goals outlined by Thai authorities. The situation highlights challenges faced under a government incentive program designed to escalate local EV production to at least 30% by 2030, according to Reuters, Bangkok Post, and Channel News Asia.

Neta, a notable entrant in the Thai market since 2022, is now grappling with compliance under a program where manufacturers are exempt from import duties, but must match imports with local production by 2024. Issues of slowing sales and limited credit have prompted Neta and others to request adjustments to this scheme as they struggle to fulfill production quotas, leading to a rollover of obligations into 2025, according to Reuters, Bangkok Post, and Channel News Asia.

Recent reports indicate that Neta has been unable to produce the necessary vehicles locally, which has led the government to withhold payments due to complaints filed by 18 of its dealerships seeking recovery of over 200 million baht (approximately $6.17 million) for unpaid debts. Neta's parent company, Zhejiang Hozon New Energy Automobile, recently entered bankruptcy proceedings, amplifying the concerns regarding the company's viability in Thailand, according to Reuters, Bangkok Post, and Channel News Asia.

Neta's contribution to the Thai market peaked at about 12% of EV sales in 2023, but has since deteriorated sharply, with registrations down 48.5% in the first five months of 2024, reducing its market share to 4%. In contrast, BYD now commands nearly half of the market, reflecting broader trends in price competition that have pushed many smaller brands to the brink, according to Reuters, Bangkok Post, and Channel News Asia.

With over 70% of Thailand's EV market now held by Chinese brands and the number of entrants doubling within a year to 18, the pressure on Neta and its counterparts continues to escalate. This competition is exacerbated by a sluggish economy in Thailand, prompting significant price reductions among numerous brands, with some slashing prices by more than 20% as a tactic to reinvigorate demand, according to Reuters, Bangkok Post, and Channel News Asia.

The Thai government had laid out an ambitious strategy to transform its car industry three years ago and aimed to secure a major shift to EV production by 2030. However, with the Thai Board of Investment extending local production timelines to avoid potential oversupply and further market disruptions, questions arise about the stability and effectiveness of policies supporting the EV sector as challenges mount, according to Reuters, Bangkok Post, and Channel News Asia.

Policymakers and industry experts, while acknowledging the unique challenges faced by Neta, argue that the issues remain largely company-specific and not indicative of systemic problems within the broader Thai EV market. Nonetheless, external environmental factors including geopolitical tensions and potential increases in tariffs on imports pose significant additional pressure on the sector, according to Reuters, Bangkok Post, and Channel News Asia.

As challenges continue to mount, dealers are voicing concerns over limited after-sales support, maintenance issues, and a general decline in customer confidence in the market. The dissatisfaction has prompted some owners to take their grievances to social media, highlighting a growing crisis for brands such as Neta, as expressed by dealership owner Chatdanai Komrutai, who emphasized, "Selling cars is difficult right now," reflecting an urgent need for re-evaluation of strategies and support mechanisms in place for brands struggling in this competitive landscape, according to Reuters, Bangkok Post, and Channel News Asia.