Thai industrial estates ride the EV boom

The Thai government has been very supportive of the EV industry and has implemented measures to promote the use of electric vehicles, through tax incentives and subsidies, to attract foreign EV manufacturers to set up factories in Thailand. These measures have also helped lower the prices of EVs in Thailand.

According to the Board of Investment (BOI), there are currently 26 companies that have applied for investment promotion privileges to make 860,195 electric vehicles, with a total investment of 86.85 billion baht (excluding land and working capital).

Among the brands that have begun commercial production and sales are Nissan, Honda, Toyota, Great Wall Motors, MG, Mercedes-Benz, and BMW.

In addition, there are 14 companies and 16 projects that have applied for BOT investment promotion to manufacture EV parts, with a total investment of 5.12 billion baht. EV batteries are considered the heart of electric vehicles. Thirteen companies and 20 projects have applied for battery production with a total investment of 9.26 billion baht. There are also eight companies and eight projects for high-capacity battery production with a total investment of 9.31 billion baht.

It was recently reported that Contemporary Amperex Technology Co Ltd (CATL), the world's leading EV battery manufacturer from China, is interested in setting up a battery production facility in Thailand and has already held discussions with the BOI.

There are also reports that many other EV manufacturers are interested in purchasing, or leasing land and establishing EV production facilities in Thailand, totalling more than 2,500 rai (400 hectares). Additionally, Chinese printed circuit boards (PCB) manufacturers are also considering relocating their production bases to Thailand to mitigate risks from geopolitical conflicts.

When these businesses choose to establish factories in Thailand, it becomes a good opportunity for industrial estates. Krungsri Research estimates that industrial estate businesses in the period 2023-25 will continue to recover steadily due to investments in expanding production capacity in line with economic conditions.

The demand for land purchase, or for lease is expected to increase, with sales and land leases projected to grow by 18-20% per year, reaching 2,200 rai (352 hectares), 2,700 rai (432 hectares), and 3,000 rai (480 hectares), respectively.

This trend is supported by the government's investment in infrastructure, particularly in the Eastern Economic Corridor (EEC), which is accelerating during the period 2024-25 under the Phase 2 development plan (2023-27). Investor confidence has improved since the Covid-19 crisis has ebbed.

Foreign investors have a growing tendency to relocate, or expand their production bases in Thailand, partly to diversify trade and mitigate risks from geopolitical conflicts.

Meanwhile, the Thai government continues to offer investment promotion privileges to attract foreign investment.

According to Yuanta (Securities) Thailand Co Ltd, the profit of Amata Corporation Plc (a leading industrial park developer) this year is expected to grow by 60.7% year on year from the thriving industrial estate business, supported by the relocation of production bases from China. There is strong foreign demand, especially from China, for industrial land in Thailand and Vietnam to set up various electronics and electric vehicles assembly and spare parts factories. In addition, it benefits from the government's investment promotion measures.

Daol Securities (Thailand) Plc also has revised up the projected profit of WHA Group Plc (a leading developer of fully integrated logistics, industrial estates, power and utilities and digital services, both in Thailand and Southeast Asia) for this year, by 4% to 4 billion baht, a 9% increase year on year. Next year, it is projected to increase by 7% to 4.8 billion baht, a year-on-year increase of 20%. This was after adjusting for additional land sales of about 2,000 rai (320 hectares) per year. The research department estimates that the company has the potential to further adjust its targets in the middle of the year, based on the high sales figures since the beginning of the year, which reflects investors' lack of concern about political issues.

Additionally, there is a chance for the company to acquire major EV customers, as it has a large area in the industrial estate that currently supports sales in the EV industry. This has resulted in a transfer volume of 1,500 rai (240 hectares) and 1,800 rai (288 hectares) for this year and next year, respectively.

DBS Vickers Securities (Thailand) Co Ltd expects Rojana Industrial Park Plc to achieve the highest sales volume in the first quarter of this year among the group, with 442 rai (70.72 hectares), ahead of AMATA and WHA with 310 rai (49.6 hectares) and 438 rai (70.08 hectares) respectively. This sales volume in the first quarter of this year accounts for a significant proportion of 57% of the annual target of 782 rai, (125.12 hectares) indicating the potential for further upward adjustments in the sales estimate.