Auto Component Hub Thailand Plans EV Package

The Thai cabinet is considering tax cuts and subsidies to boost Thailand’s EV market. The idea is clear. To ensure that the South East Asian country remains a hub for component manufacturing, even as the era of ICE vehicles ends over the coming decade and more.  The move comes even as Thailand faces a fresh bout of competition for the new era of EV manufacturing, with many countries seeing it as their second chance to muscle in into the massive automotive manufacturing segment. China having already stolen a march with its dominance in battery manufacturing.

The incentives range from subsidies on EV’s, with subsidies between 70,000 baht ($2,145) and 150,000 baht depending on the type of vehicle – cars or trucks. EV two-wheelers will also get an 18,000 baht subsidy. It further proposes lower excise tax and import duties on completely built and partially built EVs, as per the draft proposal. Cars priced below 2 million baht may get the most benefits. The National EV Policy Committee, headed by Deputy Prime Minister Supattanapong Punmeechaow, released the draft proposal. Transitioning its own market to EV’s also makes sense for the Thai economy, that is driven by tourism as well.

The broader incentives for imports will last until 2025 – a period within which local production is expected to gather momentum. Besides, the tax relaxations for EV manufacturers come with the condition that companies produce the same number of vehicles or more by 2025 that they import in the preceding years.

Santi added that the EV promotion campaign for Thailand’s EV market will not just include tax reduction and subsidy, but will also work on attracting EV-related investment to Thailand.

“In the early phase, there will be no restrictions on the types or models of EV, as we want manufacturers to explore the Thai market and focus on vehicles that are popular and have high demand first,” he added.

Thailand has set itself a target to achieve 100% zero-emission vehicle production by 2035.

From 2035 onwards, the country is planning to have every new car in the country an electric vehicle. The nation expects to attract as much as 400 billion baht investment in EV manufacturing over the coming years. Various big names trying to build factories in Thailand include Toyota, Foxconn Technology, Great Wall Motor and PTT Pcl.

Where Thailand faces a huge challenge is battery manufacturing, an area being targeted by many  competing countries, both in Asia and beyond. Constituting between 20-35% of EV costs, both auto makers and existing manufacturing hubs are racing to get into this, and decisions are likely to be led by multiple factors ranging from incentives, access to raw materials, to even the battery chemistry being bet on.  Erstwhile fuel sellers, including firms like India’s Reliance Industries, also hope to make a mark here.