Thai PTT moves closer to dominance of electric vehicle market in Southeast Asia
Thai oil and gas group PTT has signed a joint venture agreement with leading electronics producer Foxconn to manufacture electric vehicles (EVs) as Thailand aims to become the region’s leading manufacturer and exporter of electric vehicles. The move underscores the state-backed energy company’s desire to diversify away from traditional oil and gas activities, which may have slower long-term growth potential.
The state-owned PTT and the Taiwanese manufacturer plan to produce electric vehicles and related parts as early as 2023.
PTT subsidiary Arun Plus will hold a 60% stake in the joint venture with Foxconn subsidiary Lin Yin holding a 40% stake. The purpose of establishing the company is to operate an electric vehicle manufacturing business in Thailand using Foxconn’s advanced technology in manufacturing with PTT’s expertise in business operations in Thailand.
With PTT’s strong balance sheet and leadership position in the Thai energy industry, investment bank Macquarie sees this joint venture as a strategic complement to both. This is also in line with Thailand’s roadmap to increase the proportion of electric cars to 30% of total capacity by 2030. However, Macquarie believes that government subsidies or tax incentives are needed to speed up growth. adoption of electric vehicles. The company is not only targeting the Thai market, but also to become an electric vehicle hub for ASEAN.
“The initial phase targets production by 2023. The company will set up a factory to produce complete electric vehicles with advanced Foxconn technology, covering a complete hardware and software platform that will significantly reduce the development time of the design and manufacturing cost of electric vehicles while increasing the competitiveness of the electric vehicle market. The company expects to make its final investment decision in 2H22 and its first production in late 2023, ”Macquarie said in a note.
The company aims for a capacity of 50,000 cars in the first phase and 150,000 cars by 2030. The first phase is expected to use capital expenditures of 0.7 to 1.0 billion US dollars (100% participation ). According to industry standards, the obstacle IRR rate of electric vehicle manufacturing is 9.5-10%, higher than that of internal combustion engine (ICE) manufacturing at 7-9%, Macquarie said.