BYD, the world’s biggest electric vehicle maker, has made what looks like an important strategic move for the Australian EV industry by setting up a car making plant in Thailand, which could see it follow the likes of Ford, Toyota and Honda in making vehicles to export to Australia free of tariffs.
Thailand has a free trade agreement with Australia and for years big companies like Toyota and Honda have used plants there to export cars to Australia and elsewhere in Asia.
After the reforms a decade or so ago and then around 8 years ago, tariffs on cars are brought into Australia with a 5% tariff, unless made in a country with a free trade agreement with Australia, such as Thailand.
Thailand has 14 Free Trade Agreements with eighteen countries: and the most recent, the Regional Comprehensive Economic Partnership, came into force early 2022. Australia is part of that partnership which means easier imports of products such as vehicles from Thailand and other ASEAN economies.
Thailand though has become a major manufacturing hub for Asia for some of the world’s car majors. Ford uses it to export some vehicles usually made in Europe, to Australia.
BYD revealed earlier this week that it had begun construction of its Thai passenger car plant which is expected to start production in 2024 with an annual capacity of about 150,000 vehicles.
BYD is the second biggest EV brand in Australia behind Tesla which imports its cars from its huge Shanghai plant. BYD’s vehicles also come from China with the Atto 3 SUV (known as the Yuan Plus in China) first sold here last August.
BYD last week held a ground-breaking ceremony of the $US1 billion plant in Thailand at a ceremony where it delivered the 9,999 and 10,000th BYD Atto 3 vehicles to the Thai market.
That’s more than it has so far sold in Australia since sales started midway through 2022.
The establishment of a passenger car production base in Thailand is one of BYD’s key initiatives to accelerate its expansion into the Asia-Pacific market, said Liu Xueliang, General Manager of the company’s Asia-Pacific automotive sales division.
Once the factory is on line, BYD will be able to boost prospective imports into Australia from around 10,000 rate a year at the moment (but building) to more than 50,000 once the plant is at capacity in 2025.
Tesla’s shipments are running (based on orders) at around a 50,000 annual rate.
The production base project is located at WHA Rayong 36 Industrial Estate and covers an area of nearly 10 hectares. BYD bought the land in September 2022.
Last October, BYD, together with its local partner Rêver Automotive, launched the Atto 3 (the main model BYD delivers to Australia) in Thailand, with sales of the model officially starting in November.
BYD also announced last week plans to spend $US1.3 billion on a new battery plant in central China. That will meet demand both within China and from its growing network of offshore plants.
But earlier this week it revealed it had ended a long search for a car making plant site in the UK and blamed the trade disruptions caused by Brexit – which has seen Britain leave the eurozone and set up a separate market and tariff regime.
The world’s largest seller of electric and hybrid cars said will not consider building its first European car factory in the UK because of the impact of Brexit.
The world’s top-selling electric car maker, which is targeting sales of about 800,000 cars annually in Europe by 2030, has now shortlisted locations in Germany, France, Spain, Poland and Hungary.
“As an investor we want a country to be stable,” said Michael Shu, BYD’s European president, told the Financial Times. “To open a factory is a decision for decades. Without Brexit, maybe. But after Brexit, we don’t understand what happened.”
BYD had also been talking to Ford about buying a factory in Germany, but those discussions didn’t proceed.
