[KUALA LUMPUR] Malaysia’s Ministry of Investment, Trade and Industry (MITI) on Thursday (Aug 8) dismissed a report on Thai news portal The Nation that alleged US electric vehicle (EV) behemoth Tesla has dropped plans to build manufacturing plants in Thailand, Malaysia and Indonesia.
A ministry spokesperson noted that the report which was published on Aug 6 “is not an official statement from Tesla, but (quoted) an unnamed source”, and that any confirmation would have to come from the US automaker.
The spokesperson added that the move “could be a multinational’s commercial decision on their global operations… and does not reflect the industrial reforms and improved investment landscape MITI and its agencies have worked on since December 2022”.
The online article quoted a source from Thailand’s Government House, who said that Tesla will focus on the development of charging facilities instead.
Following the disbandment of its executive team, Tesla has cancelled its investment plans in Thailand, marking a broader withdrawal from investments in Asia and beyond, said the report.
“They are not proceeding (with the factory plans) in Malaysia, Indonesia or anywhere else, except for China, the US and Germany,” the source was quoted as saying.
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In July 2023, Tesla had committed to set up a country head office and service centres in Malaysia.
That month, Malaysian Prime Minister Anwar Ibrahim said that tens of thousands of high-value jobs would be created as a result of Tesla’s massive investment in the country.
As part of an agreement signed in February last year, Tesla was allowed to sell vehicles assembled overseas without incurring import tariffs. The company was also granted exemption from having a local partner and the minimum 30 per cent Bumiputera equity requirement in Malaysia.
The Business Times has contacted Tesla for comments. There has been no official word yet from Tesla or Thai officials.
Cutthroat competition
The American EV behemoth faces stiff rivalry in South-east Asia from its Chinese and South Korean contenders, particularly in Thailand – Asean’s largest auto manufacturing hub.
A day after news of Tesla’s scrapped plans in Thailand broke, the kingdom’s Board of Investment (BOI) announced on Aug 7 that it has approved a 1 billion baht (S$37.5 million) investment by Hyundai Motor Company.
The South Korean automaker intends to build a facility in Thailand to assemble electric vehicles and batteries. The plant is said to begin operations in 2026.
Said BOI’s secretary general Narit Therdsteerasukdi in a statement: “Thailand’s strong existing supply chain will allow Hyundai to source not less than a third of the raw materials and parts it needs from within Thailand, thus supporting the local industry.”
Chinese players have been firming up their presence in Thailand, as well as the broader South-east Asian region too.
These moves come amid growing aggression from the US and European countries, which have been accusing China of unfair subsidies and flooding global markets with underpriced EVs.
Most recently, the European Union slapped increased tariffs on Chinese EVs in July, on top of a 10 per cent ordinary import duty that was already in place.
As the trade war intensifies, automakers from China have turned to South-east Asia in attempts to circumvent the tariffs.
Last month, Chinese EV giant BYD – said to have invested 35 billion baht (S$1.3 billion) in Thailand since 2022 – opened its first overseas production plant in Rayong, located about 180 km from the capital Bangkok.
The Thai province is also home to Chinese automobile manufacturer Great Wall Motor’s first manufacturing plant in South-east Asia that was inaugurated in 2021.
These slew of investments come as part of the kingdom’s EV 3.5 scheme, which underscores the government’s ambition to have 30 per cent of all vehicles made in Thailand to be electric by 2030.
The nation’s flagship incentive package doles out subsidies, tax incentives and import duty cuts for both EV consumers and manufacturers. In exchange, foreign EV players have to fulfil several requirements, among which include the establishment of local manufacturing bases in Thailand.
BOI said it has already approved projects with a total investment value of more than 80 billion baht (S$3 billion) in the EV supply chain.
