Thailand’s auto components manufacturers need to adapt to reap the rewards of EV transition: ABeam Consulting

ABeam Consulting, one of the leading global business and digital transformation consulting firms and knowledge partner of Future Mobility Asia held in Bangkok last month, urges automotive component manufacturers in Thailand to re-evaluate business strategies to prepare for the transition to an electric future.

Battery electric vehicles (BEV) have become more price competitive thanks to government incentives to the point that, in some cases, BEV are as cheap or nearly as cheap to own as Internal Combustion Engine (ICE) vehicles.

“BEV that are imported from China are already cost competitive when compared with ICE vehicles manufactured and sold in Thailand. It’s not the high prices that are slowing down the adoption of BEV in Thailand at the moment, it’s the lack of supply,” said Krzysztof Tokarz, Manager in the Automotive and Manufacturing unit at ABeam Consulting.

Krzysztof Tokarz, Manager in the Automotive and Manufacturing unit at ABeam Consulting

In Thailand, the current BEV offering is limited - there are around 20 BEV models on the market compared to over 180 ICE models available. Only a few of these BEV models come from mass-market brands. For comparison, in China over 180 BEV models are available – comparable to the variety of ICE models in Thailand. In addition, sales of some BEV models launched in Thailand have been suspended due to supply constraints and high demand in China. But according to ABeam Consulting, the supply crunch is temporary, and much higher sales volumes are anticipated soon, especially when more brands offering attractive products launch their EV.

“An increase in EV sales should sound an alarm to domestic auto components manufacturers, especially those that supply ICE powertrain-related components such as engine parts, fuel tanks, transmissions, and other components. In Thailand, ICE component manufacturing is a multi-billion-dollar industry that includes over 360 auto suppliers,” added Krzysztof Tokarz.

Thailand’s auto components manufacturers need to adapt to reap the rewards of EV transition

“For the automotive industry as a whole, the shift to BEV should translate into higher revenues as the electric powertrain costs more to manufacture and, even though the costs will go down, it will continue to cost more than the ICE powertrain for many years to come. As long as buyers can pay less to charge their EV than it takes to fuel ICE vehicles, they will be willing to pay a little more upfront. In order to take advantage of this opportunity, companies need to adapt and prepare for a future where BEV dominate the market landscape,” Krzysztof Tokarz continued.

ABeam Consulting encourages the auto parts industry to use a five-step framework as a starting point for their business transformation:

  • Strategy – evaluating what products and countries to focus on and establishing the long-term objective
  • Capability – evaluating what new capabilities need to be built
  • Partnerships – looking into collaborations to achieve strategic goals and acquire relevant capabilities
  • Capital – evaluating capital needs and options to obtain it
  • Lean and sustainable operations – identifying ways to ensure that the transition is cost-effective, and operations are sustainable.

“There is no single solution that will fit every company as each company’s situation is different. Actions that automotive companies in other, more mature markets have taken, include, diversifying by co-creating new business ventures (start-ups), investing through M&A, or improving operations by optimizing the supply chain using digital technologies,” said Krzysztof Tokarz.

“Globally, the automotive industry is undergoing dramatic transformation and Thailand will be no different. It is becoming increasingly likely that making bold moves will be less risky than not making any changes to the business,” Krzysztof Tokarz concluded...

To find out how ABeam Consulting can help identify new business opportunities, please contact contactthailand@abeam.com

About ABeam Consulting (Thailand) Ltd.

ABeam Consulting (Thailand) Ltd. is a subsidiary of ABeam Consulting Ltd. – headquartered in Tokyo having 6,900 people serve clients throughout Asia, the Americas and Europe providing consulting services in Thailand since 2005, ABeam Consulting (Thailand) has more than 400 professionals serving clients in Thailand with expertise in business and digital transformation services that create the future together with corporations and other organizations. As a creative partner leading the way reliably through change, we contribute to industrial and societal change. 

Please contact us at contactthailand@abeam.com or visit https://www.abeam.com/th/en for more details.

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