SOUTHEAST ASIA: THAILAND REPORT
The Thai government plans to introduce an incentive program to promote EVs starting in 2022. The program will focus on providing subsidies to lower sales prices and reducing excise and import taxes. Automakers taking advantage of the program will be required to produce EVs locally from 2024 onward.
According to local media, the subsidy is 70,000 to 150,000 baht per vehicle, depending on the model and battery capacity. The excise tax on purchases will be reduced from the current 8% to 2%. Import duties will be reduced by 20-40% depending on battery capacity and sales price. The current maximum tariff rate is 80%, but the trade agreement will impose no tariff on Chinese-made products and 20% on Japanese-made products. Japanese-made products are also expected to be tariff-free if they meet the conditions. The current sales prices of imported cars vary from about 1 million baht for EVs from China’s SAIC Motor Group and Great Wall Motor to about 1.5 million baht for Nissan Motor’s LEAF at campaign prices.
Thailand, the largest automobile producer in Southeast Asia, has set a goal of having 30% of its domestically produced cars be EVs by 2030. Japanese car companies, which account for 90% of the production share, manufacture gasoline and hybrid vehicles. In addition, Chinese automakers import EVs from China and have yet to produce them locally.
Source: The Nikkei (The original article was partially revised by the author.)
PSR Analysis: According to the Land Transport Department of the Thai Ministry of Transport, the number of newly registered EVs in the country (excluding motorcycles and including commercial vehicles such as trucks and buses) in 2021 was about 43,500 units. This is a significant increase of 41% over the previous year.
The breakdown was as follows: HEVs and PHEVs combined grew by about 40% YOY to approximately 41,400 units, and BEVs by about 50% to approximately 2,100 units. Meanwhile, the overall share of EVs in new vehicle sales (approximately 760,000 units) in 2021 is about 6%, while the share of BEVs is about 0.3%. In other words, the share of EVs in domestic sales is not high at present. It is expected to take some time before EVs are widely distributed in the Thai market.
Although internal combustion engine vehicles currently dominate the market, the government’s move to tighten environmental regulations may encourage the spread of EVs. For example, the Ministry of Industry has announced that domestic automakers and dealers will be required to produce and sell vehicles that meet the Euro 5 emission standard by 2021, while HEVs and PHEVs will be required to meet the even stricter Euro 6 standard. The background to the introduction of these regulations is the problem of air pollution.
The main measures to promote EVs by type of vehicle are:
- Passenger cars with a retail value of less than 2 million baht: Subject to domestic production, (1) import duties on finished vehicles and related parts will be reduced by up to 40% from 2022 to 2023, (2) the excise tax rate on eligible vehicles will be reduced from 8% to 2%, and (3) a maximum subsidy of 150,000 baht will be provided.
- Pickup trucks: For domestic producers only, (1) the excise tax rate will be reduced from 10% to 0%, and (2) a maximum subsidy of 150,000 baht will be granted.
- Motorcycles: A subsidy of up to 18,000 baht will be given to motorcycles of 150,000 baht or less.
Through these promotion measures, Thailand hopes to achieve its goal of increasing the domestic production ratio of EVs to 30% by 2030. Prior to the aforementioned EV promotion measures, the Board of Investment of Thailand (BOI) announced in January 2021 new incentives for investment in EV production, including an 8-year CIT exemption for BEV production if the investment is 5 billion baht or more and the company or its supplier manufactures four key components, including batteries. The BOI has indicated that it intends to enhance EV-related benefits in subsequent years.
The Thai government is pushing forward to become an EV powerhouse in all areas, including tax incentives to attract foreign investment, subsidies for EVs, and stricter environmental regulations. PSR
Akihiro Komuro is Research Analyst, Far East and Southeast Asia, for Power Systems Research
