Thailand’s auto crown faces EV challenge

Bangkok’s long-held reputation as the “Detroit of the East” is under strain as the global shift towards electric vehicles reshapes South-East Asia’s industrial map, with Vietnam emerging as a more agile rival built around a powerful domestic champion. For half a century, Thailand’s automotive sector has been the backbone of its manufacturing economy, contributing about a tenth of national output and supporting hundreds of thousands of jobs across assembly lines, parts suppliers and logistics networks. That dominance is now being tested by the speed, structure and strategic focus of Vietnam’s electric-vehicle push.

Thailand remains the region’s largest vehicle producer by volume, exporting millions of cars annually to markets across Asia and beyond. Its industrial ecosystem is deep and mature, anchored by decades of investment from Japanese, European and American manufacturers. Yet the transition from internal combustion engines to battery-powered vehicles has exposed structural vulnerabilities in a model that relies heavily on foreign brands assembling vehicles for export rather than building indigenous technology.

The government’s response has been to position the Eastern Economic Corridor as a hub for next-generation mobility, offering tax incentives, infrastructure and policy support to global electric-vehicle makers. Chinese manufacturers such as BYD and Great Wall Motor have committed to large production facilities, drawn by Thailand’s skilled workforce, supplier base and export links. Officials argue this strategy will secure the country’s place in the electric era by plugging it into global supply chains.

Vietnam, however, has taken a different path, one centred on building and backing a national champion. VinFast, the electric-vehicle arm of the Vingroup conglomerate, has rapidly expanded from a domestic start-up into a global aspirant with listings overseas and sales ambitions in North America and Europe. Its rise has given Vietnam a focal point for policy, capital and talent in a way Thailand currently lacks.

VinFast’s approach contrasts sharply with Thailand’s assembly-led model. The company has pursued vertical integration, investing heavily in battery manufacturing, vehicle software and design capabilities within Vietnam. This has shortened development cycles and allowed faster iteration of models, a trait often associated with technology firms rather than traditional carmakers. Exports of VinFast vehicles to Western markets have also given Vietnam a brand presence on the global stage, reinforcing perceptions of the country as a serious electric-vehicle contender rather than a low-cost manufacturing base.

For Thailand, the risk lies in the timing and balance of its industrial transition. The country has invested billions of dollars over decades in internal combustion engine infrastructure, from engine plants to specialised parts suppliers. As global automakers reassess production footprints, some legacy manufacturers have begun scaling back operations or delaying new investments in Thailand. Brands such as Honda and Suzuki have adjusted regional strategies, reflecting softer demand for conventional vehicles and the capital intensity of retooling factories for electric production.

This creates what industry analysts describe as a “valley of death”, where jobs tied to older technologies disappear faster than new electric-vehicle roles are created. While electric vehicles require fewer mechanical components, they demand more expertise in electronics, software and battery chemistry, skills that are still developing within Thailand’s workforce. The shift threatens to leave gaps in employment and supply chains unless retraining and industrial diversification keep pace.

Vietnam’s advantage is not without challenges. VinFast’s aggressive expansion has required substantial capital and has raised questions about profitability and long-term sustainability in fiercely competitive global markets. Yet its existence as a domestic champion provides strategic coherence. Policymakers can align education, infrastructure and industrial policy around a clear focal point, while suppliers and start-ups cluster around a single ecosystem.

Thailand’s policymakers counter that reliance on foreign manufacturers spreads risk and avoids the pitfalls of backing a single corporate champion. By hosting multiple global players, the argument goes, Thailand can remain flexible and resilient as technologies evolve. The presence of Chinese, Japanese and Western firms also embeds the country in diverse supply chains, reducing dependence on any one market.