How far is Thailand in its journey to become an Electric Vehicle producing regional hub?

During the COVID-19 outbreak in 2020, the global passenger car sales market experienced a 15% drop. However, at the same time, the global electric vehicle (EV) market experienced a 43% increase, with Europe registering 1.4 million new EV units, followed by China at 1.2 million units, and the US at 290,000 units.

In the first quarter of 2021, global EV sales rose approximately 140% y-o-y. China has served as the main driver of these sales, coupled with increased environmental awareness around the world encouraging governments’ new EV policies.

For Thailand, as of August 2021, the total number of EV registration totaled 220,000—accounting for just 0.5% of the total number of vehicles registered as of September 2021. The total number of EV charging stations as of September 2021 was 693 stations with 2,285 outlets.

Currently, Thailand has a strong base in the automotive industry supply chain. However, it has been challenging for the country to transition its traditional automotive sector to include EV production. Thus, the government established the National Electric Vehicle Policy Committee (EV Committee) with the goal of making Thailand the hub of electric vehicle production in the region. By 2025, Thailand aims to produce 230,000 EV units and by 2030, it aims for 750,000 units, accounting for 30% of total Thai automotive production. The country additionally strives to establish 12,000 charging station outlets by 2030 and sell 100% of its EV by 2035.

To achieve these goals, the Thai government has created incentives to attract international EV producers and investors as well as grant privileges to domestic companies in order to increase the volume and value of its EV market.

The government intends to reform its excise tax structure and will announce tax measures to better support EV later this year. It also is encouraging various national agencies to replace their combustion vehicles with EV.

The EV Committee has presented incentive measures to stimulate its domestic EV market. These proposed benefits include reduced personal and corporate income taxes for purchases, exemptions or reductions in annual license plates fees, restructured battery taxes, free tollway, and free parking for EV.

As part of these investment incentives, the Board of Investment (BOI) launched new measures to replace those that expired in 2018 to stimulate investment in all types of EV including cars, motorcycles, e-bikes, tricycles, buses, trucks, and boats.

Previously, only electric car and bus purchases allowed for such benefits. In addition, the BOI expanded such measures to include manufacturing parts and equipment for EV as well as BEV platforms such as energy storage systems, charging modules, and front and rear axle modules. The BOI also grants incentives allowing for exemption from corporate income tax for a period of 3-8 years.

Last but not least, typically, a corporation must pay a tariff of 20-80% and an excise tax of 8% when importing EV into Thailand. Thus, corporations can significantly benefit from the exemption on EV import tariffs and excise taxes if they decide to invest in EV production in Thailand.

And so, Thailand’s journey to becoming an EV production hub in the region continues, and time will tell if it will be successful.

What can we do?

For over 25 years, Tractus has been assisting companies pursue investment incentives not only in Thailand, but also across the rest of Asia and around the world. We have proven experience advising companies on their business strategy locally and internationally, helping them to identify and pursue their optimal potential incentive packages. Let us show you how we can support you to make your next endeavor a success.

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Authored by

Khemthong Chanchao is a Consultant based in our Thailand office (Bangkok).