BoI’ incentives for HEV manufacturing is expected to attract Japanese car manufacturers to maintain their factories in Thailand.
Thailand’s National Electric Vehicle Policy Committee (EV Board), chaired by Deputy Prime Minister Pichai Chunhavajira, on Friday (July 26) approved a temporary lowering of the excise tax rate for hybrid electric vehicles (HEV), on the condition that the manufacturers need to invest in the technology in line with the latest technological standards and strictly on CO2 emission requirements.
The new policy is expected to attract existing car manufacturers especially Japanese companies to maintain their factories in Thailand.
Narit Therdsteerasukdi, secretary general of the Board of Investment (BOI), said Thailand EV board approves incentives for HEV manufacturing to support the electric transition.
“The measure is expected to attract at least five car makers to invest 50 billion baht of new investments within four years.”
He said currently there are an investment of seven HEV manufacturers including four Japanese companies (Toyota, Honda, Mitsubishi, and Nissan), and three of Chinese manufacturers (Great Wall, MG and Cherry Automobile)
BoI confident: five car manufacturers will further expansion investment in Thailand
“We are quite confidence that some car manufacturers will further expansion investment in Thailand because BoI and the Excise Department also consulted to existing car manufacturers to design on the new policy.”
To enjoy the reduced excise tax rates, a car manufacturer will be required to make actual new investments in Thailand of not less than 3 billion baht between 2024 and 2027, subject to BOI approval, Mr Narit said.
The reduced excise tax rate will effective during the period 2028-2032
The reduced excise tax rate will be effective during the period 2028-2032, and will apply to HEV vehicles with no more than 10 seats.
“This new measure will support the transition of the country’s automotive industry towards vehicle electrification and the future development of the whole supply chain. Thailand has the potential to become a production hub for all types of electrical vehicles, both completely built units(CBUs) and parts.” Mr Narit said.
The HEV production support measure will reduce the excise tax rate to a fixed level for the 2028 to 2032 period, replacing the earlier planed rate that had been set to rise 2% every 2 years.
According to the previous plan of the Excise Department in 2026, the excise tax rate will be increased by from 6% to 8% and 10 for vehicles emitting less than 100 g of CO2 per kilometer. The tax rate of 9%, 11% and 13% of those emitting between 101-120 g/km.
HEV manufacturers need to comply with strictly CO2 emission
To qualify for the reduced tax rates, the HEV manufacturers will need to comply with strict carbon dioxide (CO2) emission requirements:
(1) Vehicles emitting less than 100 g of CO2 per kilometer will enjoy an excise tax rate of 6%;
(2) For those emitting between 101-120 g/km the rate will be 9%. According to conditions specified by the BOI, the vehicles produced under the scheme will be required to use key parts produced in Thailand, and they will need to feature at least 4 of the 6 Advanced Driver-Assistance Systems, or ADAS.
The specified ADAS systems are: 1) Advanced Emergency Braking System (AEB); 2) Forward Vehicle Collision Warning Systems (FCW); 3) Lane Keeping Assistance Systems (LKAS);
4) Lane Departure Warning System (LDW);5) Blind Spot Detection (BSD); and 6) Adaptive Cruise Control (ACC).
The EV Board’s decision will now be submitted to the cabinet for consideration and final approval.
The combined investments of EV exceed 80 billion baht
Mr. Narit also presented to the Board an update on the significant progress seen in Thailand’s EV sector, as a result of the government’s promotion measures. The combined investments made so far exceed 80 billion baht, encompassing the production of battery electric vehicles (BEV), batteries, key parts, and charging stations.
The Excise Department’s consumer-side incentives under the so-called EV3 and EV3.5 packages have played a pivotal role in attracting 24 brands to the market, leading to the production of over 118,000 vehicles across all categories.
This growth is reflected in the registration statistics for the first half of 2024, which show a 19% year-on-year increase in BEV registrations to 37,679 units. Electric motorcycle registrations also saw a significant rise of 38% to 13,634 units. So far, 183,236 registered BEV vehicles of all types have been registered, showing the success of the government’s strategic initiatives in fostering a sustainable electric vehicle ecosystem.
The government is projected to loss 5-10 bn revenue
The Excise Department’ director-general Ekniti Nitithanprapas said the excise tax reduction will cause the government o loss revenue around 5 billion baht to 10 billion baht.
However, the policy enhances Thailand’s opportunity to become HEV hub in the region, as well as advanced parts which have friendly to environment.
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