Ministry mulls third phase of EV promotion

The Finance Ministry in Thailand is contemplating a third phase of initiatives aimed at bolstering the electric vehicle (EV) sector. This proposed phase would impose new local content prerequisites. Finance permanent secretary Lavaron Sangsnit revealed that following Thailand's introduction of EV 3.0 and EV 3.5 incentive schemes, eight Chinese EV manufacturers have set up production plants in the country.

The second phase, recently approved, entails raising the excise tax on imported EVs to 35% in 2027, up from current rates of 10% for battery EVs and 15% for range-extended EVs. This tax increase disproportionately affects importers of completely built-up (CBU) EVs, with the Excise Department's tax calculation system applying the tax-inclusive method, resulting in an effective excise tax burden of 49% for these vehicles.

This higher tax could significantly elevate the cost of imported EVs, diminishing their competitiveness against domestically produced vehicles. The Finance Ministry aims to attract additional manufacturers to establish production facilities in Thailand. A potential third phase could involve enforcing stricter local content requirements, with only locally sourced auto parts counting towards local content.

Factories meeting local content criteria could maintain the existing 10% excise tax rate, while those not compliant would face 35% excise tax or 15-20% if they meet local content but do not meet the prescribed threshold. Additionally, a vehicle trade-in scheme proposes exchanging old pickup trucks for new ones running on B20 biodiesel to reduce oil imports.

This initiative, funded by 6 billion baht from the 400-billion-baht emergency loan decree, is set to commence by year-end. Eligible vehicles include passenger cars, vans, and pickups registered before 2012, which are not wrecked, operational, fully taxed, and free of outstanding obligations. The scheme aims to curb environmental pollution and revitalize Thailand's auto industry.