In-depth Warning Analysis of Neta Auto's Thailand Debt Crisis on Overseas Strategies and Valuation of Chinese NEV Makers

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Neta Auto’s Thailand subsidiary crisis is the most landmark risk event in the overseas expansion of Chinese NEVs in early 2026. In January 2026, the Thai Ministry of Finance officially announced its plan to file a civil lawsuit against Neta Auto Thailand to recover over

in government subsidies disbursed since 2022 [1]. The essence of this event is the .

From a timeline perspective, Neta Auto entered the Thai market in 2022. Leveraging the Thai government’s EV 3.0 subsidy policy at the time (which offered subsidies of 70,000 to 150,000 Thai baht per vehicle), it rapidly rolled out vehicles via zero-tariff fully-built unit (FBU) imports. In 2023, its sales were second only to BYD, making it Thailand’s second-largest electric vehicle brand. In 2024, it sold 7,969 units with an 11.4% market share, ranking first among Chinese new power brands in Thailand [2]. However, the Thai government’s subsidy policy was explicitly oriented towards

– participating automakers must establish local factories in Thailand and meet specified production targets to continue enjoying subsidies. Per the agreement, Neta Auto was required to produce approximately 16,000 units locally in Thailand in 2024 and 19,000 units in 2025 [2]. But as its parent company, Hozon New Energy, fell into severe financial distress, these promises ultimately came to nothing.

Worse still, Hozon New Energy, Neta Auto’s parent company, entered bankruptcy restructuring proceedings in June 2025. Although Shanzi Hi-Tech has registered as the only intended investor for the restructuring, the restructuring plan has not yet been finalized as of now [3]. The parent company’s crisis directly transmitted to its Thai subsidiary, causing parts supply disruptions and triggering a class-action lawsuit by Thai consumers. The Thai Ministry of Finance clearly stated that besides Neta Auto,

, and may take further corrective and legal actions against relevant enterprises [1].

Understanding Neta Auto’s crisis must be placed within the macro framework of the evolution of Thailand’s NEV policies. In September 2022, the Thai government launched the ambitious EV 3.0 subsidy program, aiming to transform the country into a “global electric vehicle production hub”. The policy offered subsidies of 70,000 to 150,000 Thai baht per eligible electric vehicle, supplemented by tax incentives (exemptions from consumption tax, road tax, and import duties) [4]. However, the policy was embedded with a

from the start – during the EV 3.0 phase, for every vehicle imported by an automaker, it must produce one vehicle locally; starting in 2024, this ratio was increased to 1:1.5; by 2026 and 2027, the production offset requirement will be further raised to 1:2 and 1:3 respectively [4].

In January 2024, the Thai government began implementing the second-phase EV 3.5 policy, with

. This policy adjustment directly pressured Chinese automakers relying on fully-built unit exports. Notably, in July 2025, Thailand’s National Electric Vehicle Committee made emergency adjustments to the EV 3.0 and EV 3.5 policies – each vehicle produced in Thailand and exported by an automaker counts as 1.5 units, which can be used to offset production offset quotas [4]. This adjustment was interpreted as a policy buffer by the Thai government in response to market contraction pressure, but it also indicates that .

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Neta Auto’s overseas expansion model is essentially a

: leveraging the early subsidy policy window in Thailand, it rapidly seized market share via fully-built unit exports, promised local production to obtain subsidy eligibility, but did not actually implement capacity construction in actual operations. This model has certain cost advantages during the policy dividend period, but its vulnerability lies in .

In stark contrast to Neta, BYD’s layout in Thailand demonstrates the robustness of a

. BYD’s first overseas factory is located in Thailand, with an annual capacity of approximately 150,000 units. It is a wholly-owned NEV production base with four core manufacturing processes and component production capabilities. From its commissioning in July 2024 to the end of November 2025, it rolled out its 70,000th new vehicle in less than 1.5 years. The factory’s local production rate has increased to about 50%, with a peak of 54%, and the proportion of local employees exceeds 92% [4]. GAC’s Thai factory took only six months from construction to completion and commissioning in July 2025. The first phase is positioned as an SKD (Semi-Knocked Down) assembly plant with an annual output of 50,000 units, which will be expanded to 100,000 units annually in the future [4].

This comparison reveals a core proposition:

. As governments continue to raise localization requirements for foreign automakers, enterprises lacking substantive capacity layout will find it increasingly difficult to meet compliance requirements.

The underlying cause of Neta Auto’s crisis also lies in

. Successful cases of Chinese NEV overseas expansion indicate that full industrial chain ecosystem export is the key to establishing sustainable competitive advantages. In 2025, the number of Chinese auto parts suppliers in Southeast Asian markets such as Thailand saw explosive growth – as of March 2025, the number of Thailand-based auto parts companies established by Chinese investors reached 165, a three-fold increase compared to 2017 [5]. A large number of battery, motor, electronic control, and intelligent connectivity suppliers such as CATL, Sunwoda, and SVOLT have followed automakers to set up production bases [5].

However, as a new power brand, Neta Auto lacks the

possessed by leading enterprises such as BYD and Great Wall Motor. When its parent company fell into a financial crisis, its Thai subsidiary immediately faced the dilemma of parts supply disruptions, which directly affected the stability of its after-sales service system and triggered a class-action lawsuit by consumers. This indicates that .

The Neta Auto incident is not an isolated case, but a microcosm of the global NEV policy cycle adjustment. From a macro policy perspective,

– shifting from full exemption to half reduction, with the maximum tax reduction capped at RMB 15,000, while technical thresholds are simultaneously raised [6]. This adjustment marks a shift in policy focus from “universal incentives” to “high-quality development guidance”, putting forward higher requirements for enterprises’ cost control and technology upgrading capabilities.

Globally, major NEV markets show

[6]. In the US, the Trump administration adjusted the Corporate Average Fuel Economy (CAFE) standards to favor the survival and development of fuel vehicles, deviating from multiple NEV support policies of the previous administration, which may weaken the policy-driven advantages of NEVs in the US market. In the EU, a policy plan was announced on December 16, 2025, proposing to abandon the original effective ban on fuel vehicles starting in 2035 and allow some non-NEVs to continue to be sold [6]. This policy shift will greatly reduce the transformation pressure on mainstream European automakers, while potentially affecting the competitive advantages of Chinese NEV makers in the European market.

Against this backdrop, the policy risks faced by Chinese NEV makers in overseas expansion are evolving from

to . The Neta Auto crisis warns enterprises: .

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From the perspective of capital market performance, the Neta Auto crisis has dealt a

to its valuation. Hozon New Energy (Neta Auto’s parent company) has been deeply trapped in bankruptcy restructuring. Although Shanzi Hi-Tech has become the only intended restructuring investor, the restructuring plan is still pending, and the debt disposal plan is to convert 70% of supplier debts into equity and 30% into interest-free installment debts [3]. Although this debt restructuring plan relieves capital chain pressure in the short term, [3], so there is still significant uncertainty about whether it can successfully “revive” Neta Auto.

From the perspective of secondary market spillover effects, the Neta Auto incident has also caused

to the overall valuation of the Chinese NEV sector. Investors have begun to re-examine the risk exposure of Chinese NEV makers’ overseas expansion, and are applying higher risk discounts to enterprises that rely on overseas subsidy policies and lack local capacity layout.

From an industry perspective, the Neta Auto crisis may accelerate the capital market’s

. Currently, China’s auto exports are in a critical transition period from “quantitative expansion” to “qualitative upgrading” – in 2025, China’s auto exports reached 7.098 million units, a year-on-year increase of 21.1%, of which NEV exports reached 2.615 million units, doubling year-on-year [7]. However, [8].

In 2026, the EU will implement a number of new auto-related regulations, including those on material environmental protection (banned/restricted material lists), circular economy (covering recyclable material ratios, vehicle carbon footprint tracking systems, etc.), safety, Carbon Border Adjustment Mechanism (CBAM), and vehicle labeling, all of which set stricter standards than China [8]. In particular, supervision over the full life cycle of batteries not only brings standard-level challenges to Chinese automakers, but also increases export costs.

Against this backdrop, the valuation logic of the capital market is changing:

1. Shifting from focusing on scale expansion to focusing on profitability
   : BYD (1211.HK) currently has a market capitalization of USD 94.915 billion, a TTM P/E ratio of 22.87x, and a net profit margin of 4.56% [9]; Great Wall Motor (2333.HK) has a market capitalization of USD 17.239 billion, a P/E ratio of 17.17x, and a net profit margin of 5.13% [9]; SAIC Motor (600104.SS) has a market capitalization of USD 17.530 billion, a P/E ratio of 60.92x, but an ROE of only 0.98% [9]. These valuation differences reflect the market’s differentiated pricing of enterprises’ profitability and earnings quality.
2. Shifting from focusing on short-term sales to focusing on long-term competitiveness
   : Enterprises with overseas capacity layout (such as BYD’s Hungary plant, Chery’s Spain plant) or technical cooperation capabilities (such as Xpeng’s cooperation with Volkswagen) are receiving higher valuation premiums [6].
3. Shifting from single market dependence to balanced global layout
   : Enterprises with diversified and balanced market layouts will receive lower risk discounts.

The Neta Auto crisis may transmit impacts to the valuation of other Chinese NEV makers through the following paths:

. The Thai Ministry of Finance has stated that it may take legal actions against other Chinese enterprises that fail to meet local production quotas [1], which may lead investors to reprice the overseas business risks of similar enterprises. The Southeast Asian market accounts for an important share of China’s auto exports, so any tightening of supervision will affect the profit expectations of relevant enterprises.

. The case of Neta Auto’s parts supply disruptions and after-sales service system collapse may affect overseas consumers’ trust in Chinese NEV brands. The continuity of after-sales service will become an important consideration for overseas consumers when choosing a brand [4].

. The Neta Auto crisis may prompt international investors to re-evaluate the investment risks of Chinese NEV makers’ overseas expansion, and apply higher risk discounts to enterprises with light-asset models, high policy dependence, and weak local layout.

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The first warning from the Neta Auto crisis is:

. Over the past decade, the Chinese NEV industry has established significant cost advantages relying on policy support and scale effects, seizing market share overseas. However, as policy dividends in various countries gradually retreat and regulatory requirements continue to increase, business models that solely rely on cost advantages and policy arbitrage are no longer sustainable.

• Deeply cultivate local markets, rather than superficial penetration
  . Successful cases represented by BYD and Great Wall Motor show that true localization is not only about establishing assembly plants, but also about deeply integrating into the local supply chain system, cultivating local talents, and adapting to local market demands. The data that BYD’s Thailand plant has a local production rate of over 50% and a local employee ratio of over 92% [4] fully illustrates the importance of deep localization.
• Build full industrial chain collaboration capabilities
  . The clustered layout of Chinese parts suppliers in Southeast Asia [5] provides a solid foundation for supply chain collaboration for automakers. Overseas enterprises should actively integrate upstream supplier resources and establish a stable local supply chain system.
• Balance short-term gains and long-term capacity building
  . Neta Auto’s failure lies in its excessive pursuit of short-term market share, ignoring long-term investment in local capacity construction. When policy trends change, enterprises without a “moat” quickly fall into trouble.

The second warning from the Neta Auto crisis is:

. The incident of the Thai government recovering subsidies shows that the gap between policy commitments and actual performance may trigger serious legal and financial consequences.

• Establish a policy risk monitoring mechanism
  . Closely track policy changes in target markets, establish communication channels with local governments and industry associations, and obtain policy trends in a timely manner. The Thai government’s adjustment to the EV 3.0/3.5 policies in 2025 [4] provided a policy buffer period for prepared enterprises.
• Strengthen local compliance capabilities
  . In-depth study of regulatory requirements in target markets to ensure business operations comply with local legal norms. The multiple regulations on material environmental protection, circular economy, and safety to be implemented by the EU in 2026 [8] put forward higher requirements for Chinese automakers’ compliance capabilities.
• Establish an emergency response mechanism
  . The incident of Neta Auto’s parts supply disruptions triggering a class-action lawsuit by consumers shows that enterprises need to establish comprehensive crisis response plans to ensure the continuity of after-sales services in overseas markets when abnormalities occur in the parent company or supply chain.

The third warning from the Neta Auto crisis is:

. The direct cause of Hozon New Energy’s bankruptcy restructuring is a liquidity crisis, which was transmitted to overseas markets through the parent-subsidiary structure, ultimately leading to risks of subsidy recovery and asset freezing.

• Prudently assess the funding sources and financial sustainability of overseas investments
  . Avoid excessive reliance on external financing or parent company capital injections, and ensure that overseas businesses have self-sustaining capabilities.
• Establish local financing channels
  . Utilize local financial markets for financing to reduce dependence on parent company cash flow, while achieving local hedging of exchange rate risks.
• Optimize debt structure
  . Avoid concentrating debt risks in overseas subsidiaries, and ensure effective isolation of risk transmission in extreme cases.

The fourth warning from the Neta Auto crisis is:

. The risks of over-reliance on a single market have been fully exposed in the Neta Auto case.

• Build multi-regional production layout
  . In 2025, the local European production capacity of BYD’s Hungary plant, Chery’s Spain plant, and supply chain enterprises such as battery makers is being released [8]. This regional hub strategy of “setting up a plant in one place to radiate multiple countries” helps to diversify policy risks.
• Emphasize brand and service reputation building
  . Thai consumers’ trust in Japanese brands stems from decades of accumulated after-sales service networks [4]. Chinese automakers need to establish comprehensive after-sales service systems in overseas markets to enhance brand reputation.
• Promote technology export and standard co-construction
  . In 2025, international standard projects such as ISO 25354 and ISO 25355, in which Chinese experts are deeply involved, have entered the review stage [5]. The Chinese auto industry is shifting from a rule follower to a rule participant, which will help establish long-term competitive advantages.

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Although the Neta Auto crisis has sounded an alarm for the industry, from a macro trend perspective, Chinese NEV overseas expansion is still in a

. In 2025, China’s auto exports reached 7.098 million units, a year-on-year increase of 21.1%, and NEV exports reached 2.615 million units, doubling year-on-year [7]. In 2026, with the release of local European production capacity of BYD’s Hungary plant, Chery’s Spain plant, and supply chain enterprises such as battery makers, China’s auto market share in Europe is expected to rise rapidly [8].

In the long term, Chinese NEV overseas expansion is showing the following trends:

• Upgrading from fully-built unit exports to full industrial chain ecosystem exports
  : The clustered overseas expansion of parts suppliers [5] marks the evolution of the Chinese auto industry’s global strategy from product export to industrial chain export.
• Evolving from single market to balanced multi-regional layout
  : A diversified layout in markets such as Southeast Asia, Europe, Latin America, and the Middle East is taking shape, reducing the risk of dependence on a single market.
• Evolving from cost competition to technology and standard competition
  : Intelligent technology has become the “killer app” of Chinese cars, and the application of large language models (LLMs) in vehicles will push intelligent development to a real inflection point [6].

For investors, the Neta Auto crisis provides the following implications:

. Enterprises with complete overseas production bases and supply chain layouts such as BYD and Great Wall Motor have stronger risk resistance capabilities in the face of policy risks. Currently, BYD (1211.HK) has a market capitalization of USD 94.915 billion, a P/E ratio of 22.87x, and an ROE of 17.62% [9]; Great Wall Motor (2333.HK) has a market capitalization of USD 17.239 billion, a P/E ratio of 17.17x, and an ROE of 13.11% [9]. The valuations of these enterprises reflect the market’s recognition of their localization capabilities.

. 2026 will be the first year of commercialization of L3-level autonomous driving, and intelligent technology exports will become a new value growth point [8]. Enterprises with high-end brand layouts (such as BYD Yangwang and Denza) and long-range technical advantages [6] will more easily maintain competitiveness after the purchase tax retreat.

. The Neta Auto case shows that enterprises that over-rely on policy dividends and lack substantive local capacity layout will face huge survival crises during the downward phase of the policy cycle. Investors should remain cautious about such enterprises.

• Policy Risk
  : NEV subsidy policies in various countries continue to retreat, and regulatory requirements are continuously increasing, which may affect corporate profit expectations.
• Geopolitical Risk
  : Sino-US-EU trade relations are complex and volatile, which may create additional obstacles for Chinese automakers’ overseas expansion.
• Operational Risk
  : Factors such as cultural differences in overseas markets, labor management, and supply chain stability may affect corporate operational efficiency.
• Financial Risk
  : The huge capital demand for overseas investments may put pressure on corporate cash flow and debt structure.

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Neta Auto’s Thailand debt crisis is a

in the process of Chinese NEV overseas expansion. This incident profoundly reveals the vulnerability of the “policy arbitrage” overseas expansion model, and highlights the key role of deep localization, full industrial chain collaboration, and sound financial management in overseas expansion.

For Chinese NEV makers,

. Successful overseas expansion is no longer simply about exporting products, but about establishing complete R&D, production, sales, and service systems in target markets, and deeply integrating into the local industrial chain and ecosystem. Only in this way can long-term competitiveness be maintained amid policy cycle fluctuations and market environment changes.

From a valuation perspective, the Neta Auto crisis will accelerate the capital market’s restructuring of investment logic for NEV makers’ overseas expansion. Enterprises with deep localization capabilities, industrial chain collaboration capabilities, and technological innovation capabilities will receive valuation premiums, while enterprises with light-asset models, high policy dependence, and weak local layout will face valuation discounts.

Looking forward, Chinese NEV overseas expansion is still in a strategic opportunity period, but “high-level” challenges have arrived.

will determine whether Chinese automakers can truly “take root” in overseas markets. 40 years ago, China adopted a “market for technology” approach to "