Thailand has made known its intentions to be an electric vehicle (EV) hub in the region, but the plan faces some roadblocks. EV production in the Land of Smiles is unlikely in the near future, given their small sales to date and carmakers’ production limitations, Bangkok Post reports.

According to Asst Prof Yossapong Laoonual from King Mongkut’s University of Technology Thonburi, Thai motorists still perceive EVs and hybrid cars as too expensive. Taking the more common and cheaper hybrids as base, he pointed out that prices for locally assembled hybrids are now above one million baht for Japanese brands and above 2.8 million for German luxury brands.

There are three brands that assemble hybrids in Thailand – Toyota, Honda and Mercedes-Benz with its diesel hybrids. Hybrids and EVs are subject to 10% excise tax, and the rate will remain unchanged after the new excise tax regime takes effect in 2016.

Eco cars are priced from 400,000 to 500,000 baht, while B-segment cars sell for 600,000 to 800,000 baht in Thailand, making hybrids expensive in comparison. Land Transport Department figures show only 60,000, or 1% of Thailand’s six million vehicles classified as hybrid or plug-in hybrids.

Mercedes-C300-HybridMercedes assembles the C300 diesel hybrid in Thailand. Toyota, Honda are the other hybrid manufacturers

“The present number of hybrid drivers cannot attract massive investment from any car companies, unlike the state-promoted eco-car scheme. More importantly, most parts for hybrid cars and EVs must be imported, particularly lithium batteries, the domestic manufacture of which is yet to meet the minimum requirement of 40% local content, but eco-car makers are now able to use more than 70% local content,” Asst Prof Yossapong said.

Vichai Jirathiyut, president of the Thailand Automotive Institute, agrees. “To attract investment for lithium-battery production in Thailand, annual production capacity would have to total more than 100,000 batteries to achieve economy of scale, and that’s not easy,” he said.

But there’s nothing government incentives can’t spur, and the influential Toyota Motor Thailand (TMT) is suggesting that some sweeteners be given.

Senior VP at TMT Suparat Sirisuwannangkura said to make EV production viable, the Thai government should offer incentive packages to manufacturers as soon as possible. He pointed out that other Asean members, particularly Malaysia, are trying hard to attract foreign direct investment with EEV schemes that include hybrids and EVs. Thailand risks losing its competitiveness if it fails to follow suit, he added.