Thailand’s second-largest EV insurer, Tokio Marine, stops new policies and reviews renewals case-by-case following guidance on high accident rates, costly parts and falling car values. EV sales drop as concerns mount.
Thailand’s shift to an EV auto industry took what may turn out to be a significant blow on Tuesday. It came as the country’s second-largest EV insurer put the brakes on new policies for the cars. In turn, this followed devastating advice issued by the Thai General Insurance Association. In short, it raised disturbing issues such as a high accident-to-damage ratio, overpriced parts and the falling market value of the insured EV cars. It remains to be seen whether other insurers will follow suit. At the same time, it followed a Deloitte report which showed interest in EVs among Thai customers dropping sharply. Furthermore, a devastating McKinsey & Co. report shows that 46% of American and 49% of Australian owners plan to ditch their EV vehicles for traditional ICE (Internal Combustion Engine) vehicles next time.
The troubled EV industry in Thailand received a huge blow on Tuesday when the country’s second insurer said it was no longer accepting new policies.
Later in the day, Tokio Marine Insurance (Thailand) Public Company Limited moved to clarify its position. However, its initial statement was clear. The firm is Thailand’s second-largest EV insurer with a 19% share of the market.
Thailand’s second-largest EV car insurer puts the brakes on new policies and plans to review renewals on a case-by-case basis after damning guidance
‘We do not accept insurance for electric vehicles (EV) of all brands, including new jobs, transfer jobs, and renewal jobs,’ the firm announced.
On Tuesday morning, it was reported that the firm was not offering further policies on all brands of EVs. However, the firm later indicated that it would review existing premium renewals on a case-by-case basis. Certainly, it indicated that this would be based on past claims.
All eyes are now on the country’s largest EV car insurer, Viriyah Insurance, with 23.5% of the market.
Nonetheless, the decision by Tokio did not come out of the blue. In short, it is understood to be based on recent guidelines issued by the Thai General Insurance Association. This advisory is based on disturbing trends within the sector.
Parts for EVs are 50-60% more expensive than normal ICE (Internal Combustion Engine) cars and according to the national insurance body, more prone to damage
For instance, it is being reported that essential spare parts for EV cars, many of them Chinese-made, are estimated to be 50-60% more expensive than normal ICE (Internal Combustion Engine) vehicles.
Secondly, there is an increasing number of claims on EV vehicles which constitute the full value or, in some cases, over the value of the vehicle itself.
This has come about because of price reductions caused by the dumping of Chinese EV cars on Thailand’s market. Even as we speak, the Chinese market leader BYD has announced a ฿340,000 reduction on one of its leading models from ฿1.199 million to ฿859,000.
Certainly, in that case, it was to celebrate the Chinese firm building its first production facility in the kingdom.
Meanwhile, the sale of EVs in Thailand has slowed. Sales of EV cars running solely on electric power were 1.5% down in May compared to the same period last year.
Fall off in sales momentum and market demand for EV cars are now being confirmed by sales data and reputable international surveys. Huge oversupply from China
The sales figure was 5,474 cars. Certainly, this was up on the 4,088 cars sold in April. However, there was a huge slump in sales from January 2024 to February 2024 and the sales levels have not recovered to levels seen in the last few months of 2023.
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At the same time, there are reports of a large buildup of imported EV cars that cannot be sold at Laem Chabang Port. In addition, dealers are cutting back on orders.
In turn, this has led to massive price promotions. The Thai government has invested billions of baht in subsidies to attract Chinese manufacturers to the kingdom.
United States, European Union and now even Indonesia are imposing tariffs on Chinese goods and products because the Communist country is dumping goods
However, the United States and European Union have imposed heavy tariffs on Chinese exports. Many fear that Thailand may become a dumping ground for these vehicles, as with other industrial products such as steel and electronics.
Furthermore, the lacklustre figures being recorded for EV sales are beginning to be confirmed by research.
Deloitte just released a report, the 2024 Global Automotive Consumer Study. It showed that Thai potential purchases of EVs had dropped sharply from 31% in 2023 to 20% in 2024.
Of course, it is easy to see why. This week’s Thai Insurance Association guidance confirms that many relatively minor fender benders or crashes on the roads have rendered EV cars worthless.
Across the world in the last months, EV car sales and market shares have begun to fall back.
For instance, in the UK, where despite fleet sales propping up the figures, normal drivers have turned off. A key reason is the deterioration in the resale value of such cars. Many European and British car dealerships will no longer make offers for EV cars.
Government’s EV gamble open to question. Kingdom may yet pay a high price although there may be hope the shift to hybrid (HEV) vehicles will save the day
Nonetheless, there is still hope for Thailand’s strategic industrial gamble which may be on the verge of disaster.
The same Deloitte report shows that Thai drivers have shown increased interest in hybrid EVs. This has risen from 10% to 19%. In short, this is also reflected in sales or market performance.
Nonetheless, this may be short-lived if the whole EV drive stalls. Undoubtedly, this looks like what is happening worldwide.
For example, a worldwide McKinsey & Co. survey has just been carried out. In a shock to Dr Philipp Kampshoff of McKinsey’s Future of Mobility Centre, the findings show 46% of American EV owners will switch back in their next purchase to an ICE (Internal Combustion Engine) vehicle.
‘I didn’t expect that,’ Dr. Kampshoff told Automotive News. ‘I thought, ‘Once an EV buyer, always an EV buyer.’
Survey shows Australia, a key potential market for Thai EV exports, has a particularly disappointed cohort of EV car owners. 49% to go back to ICE cars
The survey also showed that the rate was even higher for Australians at 49%.
This is a future hope for Thailand as an export market for EVs. However, last month an Australian government official was equivocal on whether its ministry would follow the United States and Europe in applying tariffs on low-cost Chinese-manufactured EVs.
Certainly, Thailand cannot expect to avoid these potential tariffs as the United States has already set a precedent for the solar panel industry.
At the same time, the world is entering an age of protectionism. Even within ASEAN, Indonesia moved last week to apply massive tariffs on Chinese imports due to the dumping of excess products on its market.
Indeed, the problem is becoming very acute for Thailand with the Federation of Thai Industries (FTI) highlighting that Thailand’s steel industry is being drowned by cheap Chinese products.
The national steel industry has been left reeling and operating at less than 28% capacity.
Countries worldwide show a high proportion of EV car users wish to make the switch back to petrol or gasoline-fueled cars after being initial EV owners
Meanwhile, even in countries previously deemed EV-friendly, the level of buyer remorse among EV owners is rising. In Brazil, China, France, Germany, Italy, Japan, and Norway, the share of EV owners unhappy with their last EV vehicle has risen to 29%.
Certainly, it should be noted that many of these buyers were pioneers. For instance, green thinkers sold on the EV message.
The McKinsey survey identifies several key reasons for the unhappiness of EV drivers. The main bone of contention was a lack of EV charging infrastructure. In particular, the lack of means to charge at home.
At the same time, anti-EV campaigners have pointed out that the United States does not have the electric generation capacity to handle a full switch to EV vehicles. Campaigners have particularly highlighted the load required by heavy-duty vehicles.
US Congresswoman from Iowa, Mariannette Miller-Meeks, pointed out last week that there are 278 million vehicles on US roads. A 100-mile charge is 30 kWh.
That would take 8.34 billion kWh. In 2023, the United States electric grid only generated 4.178 billion kWh. Certainly, 60% of that was generated by fossil fuels.
In brief, the same scenario applies to Thailand.
Congresswoman, last week, did not rule out EV cars. However, she questioned whether the US government has thought at all about electricity grid demands
Significantly, the US Republican politician and committee chair did not completely rule out EV cars.
However, she took issue with government mandates and intervention in the industry. Particularly, at an economic level, history has shown us that this is typically a recipe for disaster.
Meanwhile, the McKinsey survey also cites the hidden costs of owning an EV.
Certainly, this also includes anxiety about accidents and the growing list of horror stories. Today’s action by a leading Thai insurance firm shows that these stories are real and a significant factor.
Finally, survey respondents also reported anxiety felt over the range of the EV vehicles. They simply want to revert back to the reliability of a fuel-fed combustion engine car.
Inability to insure EV cars could end the EV dream
In the meantime, as of now, one Thai insurer is presently only accepting renewal policies on existing EV car contracts.
In addition, these premium renewals are subject to review on a case-by-case basis. The question is whether this will become a bigger issue in the coming weeks.
If so, it will be a major stumbling block for the Thai government’s EV vision which it announced over 5 years ago.
As things stand, the government’s generous subsidies to EV cars and the ensuing chaos within the automotive industry have already severely damaged the existing industry built up by Japanese and US automakers.
In addition, it continues to threaten that industry and the large Thai-owned parts manufacturing trade which generates both employment and exports for the kingdom.
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Further reading:
Lack of coherence in government policy is the root cause of Thailand’s massive economic problems
Disturbing questions that must be confronted over Thailand’s reeling economy are China and EV cars
First-quarter GDP growth surprises analysts based on higher tourism and consumer spending growth
Central bank holds interest rates. Economy will grow 2.6% in 2024 as Srettha pushes home ownership
Economy unlikely to grow in first quarter as Thai manufacturing crumbles. Hard choices ahead
New Finance Minister expected in April as economic malaise deepens with downgrades in GDP growth
