SAIC hatches plan to export MG4 out of Thai factory to EU to avoid tax

SAIC Motor Corporation, the owner of the MG brand, which is currently the best-selling Chinese EV in Europe, is hatching a plan to export its popular MG4 model straight out of its Thai manufacturing plant to sail around the EU’s maximum 46.3% (36.3 % + 10%) import tax.

According to Thai media, the factory was meant to be an export hub for the Southeast Asian region. SAIC’s Vice President Suroj Sangsnit said it should take advantage of the situation. Still, Thailand, which has no trade agreement with the EU yet, may face duties of 10-20% if it starts exporting to Europe.

Looking to manufacture in Europe

The company said earlier that MG Motor accounts for about 70% of all vehicles sold by SAIC outside China. Since July 2023, it has been looking for a suitable location to start manufacturing in Europe. But before such a factory is up and running, too much valuable market share could be lost.

SAIC owns a plant in Longbridge near Birmingham in the UK, the homeland of the original brand. This plant is used as MG Motor’s research and development center. However, no cars have been built there since 2016, and getting it to full production would require time and severe investments.

MG’s factory in the Chonburi province in eastern Thailand is a joint venture between SAIC Motor and the Charoen Pokphand Group. It employs around 1,000 people, of whom 98% are Thai. The first units of the fully electric MG4 rolled off the production lines in November 2023, with the first deliveries in the ASEAN region in April 2024.

Negotiation free-trade agreement

SAIC also invested in the so-called New Energy Industrial Park, which includes a brand-new battery factory to assemble 50,000 Cell-To-Pack batteries annually and an MG auto parts development zone in cooperation with automotive suppliers.

The Chinese hope the Thai government will finish negotiating a free-trade agreement with the European Union by year-end, which would help open EU markets for Thai EVs. “Thailand never exported automobiles to Europe, as there has been no trade agreement between the two regions,” the SAIC VP said. “It is estimated that Thailand will face import duties of 10-20% if it starts exporting EVs to Europe.”

40% of the parts must be Thai

For the MG4s coming out of the factory to be considered ‘originated from Thailand’ by Europe, they must at least contain 40% locally produced components. According to Suroj Sangsnit, a number of parts are already made locally, like the ESS battery, HV/LV harness, e-compressor, onboard charger, and DC/DC converter. BMS, tractor motor, drive control unit, reduction gear, and PCU inverter are now being developed with partners and suppliers.

Suroj added that development could take at least a year, after which the Automotive and Tyre Testing, Research and Innovation Center must homologate the parts. Even if this could be accomplished, it would only apply to the MG4. All other electric models MG exports to Europe right now, like the MG-ZS EV, Marvel R, or the  MG5, are built in China for the time being.

SAIC Motor has three R&D innovation centers in Silicon Valley, London, and Tel Aviv. It also has three design centers in London, Munich, and Tokyo and operates four production bases and factories abroad in Thailand, Indonesia, India, and Pakistan.