Hyundai Mobility Thailand is considering expanding vehicle production in Thailand, although a final investment decision will depend on the government's forthcoming electric vehicle (EV) tax policy, according to company management.

The National EV Policy Committee agreed on September 10th to introduce a new excise tax framework intended to encourage local EV production and the use of domestically sourced components, while discouraging imports of completely built-up EVs. However, details of the tax rates have yet to be finalised.

Wallop Chalermvongsavej, Managing Director of Hyundai Mobility Thailand, said the company is monitoring policy developments before committing to further investment.

"If the government provides policy clarity, our parent company will likely have plans to produce new vehicle models in Thailand, which would mean investment expansion here," he said.

The potential expansion comes as Thailand plans to use the new excise tax structure to increase local EV production. For Hyundai, the final policy details will determine the conditions under which additional production investment could be made in the country.

Hyundai invested 1 billion baht in a manufacturing facility in Samut Prakan, which began operations earlier this year with the assembly of the Ioniq 5 EV. The plant has an annual production target of 5,000 units, serving both domestic demand and regional export markets.

Thailand is considered by the South Korean automaker as an export base in Southeast Asia. According to Wallop, the local content ratio of Hyundai's EV production has reached 46%, compared with the government's minimum requirement of 40% needed to qualify for tax incentives.

However, he said that efforts to increase domestic sourcing must take into account the readiness of Thailand's supply chain.

"Achieving a 40% local content target is already highly challenging," Wallop said, noting that higher local component costs could affect vehicle prices and the cost of local assembly operations.

The local content requirement is therefore another factor in Hyundai's assessment of the policy framework, particularly as the company considers whether additional production capacity and new vehicle models can be supported by Thailand's supply chain.

Hyundai has also expanded its product line-up in Thailand with the launch of the Staria Hybrid, an 11-seat multi-purpose vehicle powered by petrol and electric battery systems. The company expects monthly sales of 60-100 units for the hybrid model and around 60 units for the diesel version.

The hybrid model is aimed at executives and urban drivers seeking fuel efficiency and quieter driving, while the diesel model is marketed for provincial markets. Hyundai forecasts Thailand's total vehicle sales this year at 670,000-680,000 units, supported by delayed vehicle deliveries from earlier in the year. The company said conventional automakers continue to face pressure from weak economic conditions and the growth of EVs.

Wallop said Thailand's automotive assembly plants are operating at less than 25% of capacity amid sluggish sales of internal combustion engine vehicles, particularly pickups. Rapid technological advances are shortening EV model cycles, with many models remaining competitive for only 6-12 months, compared with about four years for conventional vehicles, he noted.

This is affecting automakers' production and sales planning as they assess future investment and model strategies.