Mazda Eyes Thailand as Key Hub for Electric SUV Production

Mazda SUV

Japanese automaker Mazda is setting its sights on Thailand to become the main production base for its electric and electrified compact SUVs. This move is part of Mazda’s broader strategy to expand its electric vehicle (EV) footprint and to meet the rising demand for environmentally friendly vehicles across the ASEAN region. The investment aligns with Thailand’s ambitions to be a central player in the electric vehicle manufacturing sector.

Strategic Investment in Thailand’s EV Industry

Mazda announced an additional investment of 5 billion baht ($148 million) in Thailand. According to Thailand’s Board of Investment (BOI), this significant financial commitment will enable Mazda to produce up to 100,000 electrified compact SUVs per year. The investment will not only support domestic demand but also fuel exports to Japan and other ASEAN nations, enhancing Mazda’s regional presence.

The investment will focus on two of Mazda’s key manufacturing facilities in Thailand: the Mazda Powertrain Manufacturing Thailand and the AutoAlliance plant. The latter is a joint venture between Mazda and U.S. automaker Ford. The company plans to enhance its vehicle production lines, including the development of engine and electric vehicle battery production, to support the company’s future electrified product offerings.

Mazda’s Strategic Shift Toward Electrification

This investment marks the beginning of Mazda’s gradual shift towards electric vehicle production. According to Masahiro Moro, Mazda’s President and CEO, this is just the start of their transition to xEV (electric vehicle) production. In 2024, like many of its Japanese counterparts, Mazda faced operational challenges, including the suspension of production due to scandals involving tampered safety test results. Despite this, Mazda is taking proactive steps to strengthen its position in the rapidly growing EV market.

The Thai market itself saw a decline in car production in 2024, with a 20% year-on-year drop, according to the Federation of Thai Industries (FTI). However, the Thai government’s support for the electric vehicle industry, including the extension of the BEV production requirements, is expected to provide a significant boost. As of the end of 2024, Thailand had produced nearly 10,000 battery electric vehicles (BEVs), signaling the country’s readiness to be a significant player in the EV landscape.

Conclusion: A Green Future for Mazda and Thailand’s Automotive Sector

Mazda’s focus on Thailand as an EV production hub reflects both the company’s commitment to sustainability and Thailand’s strategic importance in the global automotive industry. As Mazda advances its electrified product line, it aims to capitalize on Thailand’s growing automotive ecosystem and favorable policies supporting EV production. The company’s long-term goals will likely help strengthen both Thailand’s automotive sector and Mazda’s position in the global EV market.

Mazda to Establish 10GWh Lithium Battery Pack Plant in Japan

Mazda lithium battery

Mazda Motor has announced plans to construct a new lithium battery module pack plant in Yamaguchi, Japan. The facility will have an annual production capacity of 10GWh and will produce modules and packs for automotive cylindrical lithium-ion battery cells. These cells will be supplied by Panasonic Energy, a Japanese battery manufacturer.

Supporting Mazda's EV Platform

The battery packs produced at the new plant will be installed in Mazda's battery electric vehicles (BEVs) built on a dedicated EV platform and manufactured at Mazda's vehicle plant, also located in Japan. 

This move follows a partnership agreement established between Mazda and Panasonic in September 2024 for the supply of batteries for Mazda's upcoming BEVs, which are set to launch in 2027.  Their joint initiative, aimed at expanding battery production and advancing technology development, has received approval from Japan's Ministry of Economy, Trade and Industry (METI).

Japan’s Aluminium Imports Decline Due to Weaker Demand in Automotive and Construction Sectors

Japanese aluminium imports saw a significant decrease in June, both on a monthly and yearly basis, driven by reduced demand in the automotive and construction industries. According to customs data, aluminium imports fell by 16.5% month-on-month and 14.3% year-on-year to 84,770 tons in June. This brought the total volume for January to June down by 4.5% year-on-year to 506,818 tons.

The Japan Aluminium Association (JAA) reported a 0.7% year-on-year decrease in the production of aluminium goods in June, totaling 144,775 tons. This decline followed three consecutive months of production growth. Domestic sales of aluminium products also fell by 3.2% year-on-year to 144,944 tons in June. Overall, the total production of aluminium goods in the first half of the year fell by 2.9% year-on-year to 826,365 tons, continuing a three-year downward trend.

The automotive industry, a significant consumer of aluminium, faced reduced demand due to car-testing scandals involving faulty safety data. Major manufacturers such as Daihatsu, Toyota, and Mazda suspended production for periods during the first half of the year to address issues with vehicle safety certification data. Consequently, total passenger vehicle output dropped by 9.8% year-on-year to 3.7 million units from January to June.

In the construction sector, the use of aluminium products fell by 10% to 172,438 tons in the first half of the year. This decline was attributed to project delays caused by rising material and labour costs and a preference for new materials over aluminium for window frames.

Additionally, Japan's imports of secondary aluminium alloy ingots (ADC12) were 77,414 tons in June, down by 2% month-on-month and 24% year-on-year, according to the finance ministry.

Mexican GDP Outlook Dims as US Tariffs Impact Economic Growth Forecasts

Mexico

Mexican GDP outlook deteriorated significantly as the Institute of Finance Executives (IMEF) lowered 2025 growth forecasts for the fourth consecutive month due to escalating US tariff impacts. The Mexican GDP outlook now projects just 0.1% growth in 2025, down from 0.2% in April, 0.6% in March, and 1% in February, while 37% of survey respondents forecast economic contraction as trade restrictions increasingly affect Mexico's export-dependent economy.

Trade Disruptions Compound Economic Headwinds

Mexican GDP outlook reflects mounting challenges as effective tariff rates on Mexican exports exceed those imposed on Canada, Brazil, India, Vietnam, and other trading partners despite some US exemptions for goods meeting regional content requirements. IMEF economic studies director Victor Herrera warned that May trade data will likely reveal sharp declines in Mexican exports to the United States. Additional disruptions from screwworm outbreaks in cattle led to port closures and curtailed beef exports worth $1.3 billion annually.

Meanwhile, automotive sector concerns intensify as major manufacturers consider production relocations or scale-backs following Stellantis's confirmed plans to shift operations to the US. Reports suggest Nissan may close one or both Mexican plants, prompting Mexico to dispatch deputy economy minister Luis Rosendo Gutierrez to Tokyo for discussions with Mazda, Nissan, Toyota, and Honda executives. These developments threaten a cornerstone industry of Mexico's manufacturing economy.

Employment and Investment Climate Face Structural Pressures

However, employment forecasts reflect broader economic pessimism as IMEF reduced 2025 job creation projections to 200,000 from 220,000 in April. Mexico's social security administration reported only 43,500 new jobs over the past 12 months ending May 5th, highlighting labor market weakness. Constitutional reform uncertainty and potential US taxes on remittances create additional investment climate risks beyond trade policy challenges.

Therefore, monetary policy adjustments attempt to support economic activity despite inflation concerns. Mexico's central bank cut benchmark interest rates by 50 basis points to 9% on May 8th, marking the third reduction in 2025. IMEF projects year-end rates at 7.75%, down from previous 8% forecasts, while maintaining 2025 inflation expectations at 3.8% despite April's 3.93% consumer price index reading.

Currency Stability Masks Underlying Economic Vulnerabilities

Furthermore, peso exchange rate projections indicate modest weakening to Ps20.80/$1 by year-end compared to April's Ps20.90/$1 forecast. The peso recently strengthened to Ps19.34/$1, though Herrera attributed this movement to dollar weakness rather than peso strength. Currency stability provides limited comfort given underlying economic fundamentals deterioration across trade, employment, and investment indicators.

As a result, Mexico faces a challenging economic environment where tariff policies increasingly outweigh traditional competitive advantages in manufacturing and proximity to US markets. The confluence of trade restrictions, sectoral disruptions, and political uncertainties creates headwinds that monetary policy accommodation may struggle to offset entirely through 2025.

The Metalnomist Commentary

Mexico's rapidly deteriorating GDP outlook exemplifies how trade policy shifts can fundamentally reshape economic trajectories for manufacturing-dependent economies, particularly those integrated into North American supply chains. The automotive sector's potential restructuring represents a critical inflection point for Mexico's industrial base, while the increasing tariff burden highlights the vulnerability of export-oriented economies to protectionist policy changes in major destination markets.