cross-posted from: https://scribe.disroot.org/post/12053717
Chinese brands went from almost nothing to about 85% of Thailand’s electric vehicle market in four years, and the country’s 700,000-worker auto parts chain is absorbing the cost. The usual explanation is that Thailand opened the door too wide. The sharper one is that it priced the entry ticket in the wrong unit: its incentive rules counted locally assembled cars, and BYD, the market leader, makes roughly 75% of its own components.
The cautionary-tale version of this story writes itself. Thailand handed out subsidies and tax cuts, Chinese carmakers flooded in, Japanese plants closed, and Thai suppliers went bankrupt.
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The [Thai] government’s own chief economic planner admitted the shift came far faster than Bangkok expected.
But the same country used the same basic tool once before and got the opposite result. Thailand became the “Detroit of the East” by luring Japanese automakers with local production requirements. Those requirements built a supplier base because of how Japanese carmakers buy parts, not because of the rule itself.
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Bangkok is now reversing course. On September 10, the national EV policy board agreed in principle to a three-tier excise tax that charges the least for cars built with deep local content and the most for fully imported ones. Prime Minister Anutin Charnvirakul flew to Tokyo last month to reassure Japanese automakers.
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The new three-tier excise is Bangkok’s attempt to change the unit. Free trade obligations mean Thailand cannot simply raise tariffs on Chinese cars, Finance Minister Ekniti Nitithanprapas has said, which leaves the excise tax as the main lever.
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The more important change is buried in the fine print. The local content formula is being rewritten to exclude operating expenses, labor costs and profits, and to weight engines, motors, drive systems and Thai research and development more heavily. That is the first time the rulebook measures what goes into the car rather than whether the car was bolted together in Thailand.
Industry wants it tougher still. Ten automotive and parts associations, including the Thai Auto-Parts Manufacturers Association, have asked for an excise of at least 32% on fully imported EVs, a cap on imports equal to 10% of local production, and an 80% local content requirement. The FTI has floated a 32% to 50% range for imports.
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Lol as if this is a new thing for capitalist China either.
What’s your argument, that Microsoft or the US is doing something bad to people, so China should get to do bad things to those people too? That doesn’t make much sense.