Automotive Industry Thailand: Advancing towards the EV center of Southeast Asia
Over the next five years, the BOI anticipates an investment volume of more than USD 5.5 billion for electric vehicles (EV) and EV-related investments in Thailand. Import duties and excise taxes will also be significantly reduced. The automotive industry in Thailand will thus further expand its leading role in the Asia-Pacific region. There are great opportunities for vehicle manufacturers, but especially for suppliers, in a flourishing production market.
Thailand is ambitious to become Southeast Asia’s EV manufacturing hub, while the production is planned to reach more than half a million EV units per year.
The Thai Board of Investment (BOI), which promotes foreign investment in Thailand, has approved more than 24 projects by car makers to produce electric vehicles of all types such as battery electric vehicles and hybrid electric vehicles in the country since the first EV promotion package in 2018.
Last year the new government set the national goal of becoming the region’s manufacturing hub for electric vehicles. In the next five years, the BOI Thai expects to see all EV and EV-related investments in Thailand amounting to more than 200 billion THB (5.5 billion USD).
Investment Incentives, Tax and Duty Reductions
In our previous blog article, we discussed about the new incentive package of the Thai government. Thailand reduced the excise tax from 8 percent to just 2 percent for models of electric cars under 7 million baht. The import duties are up to 40 percent less for completely built-up units.
According to the secretary-general of Thailand’s office of the BOI, Thailand is the first country in the region to announce such profound measures to promote the EV industry. Apart from the vehicle, the key parts should also be manufactured in Thailand. In the current growth speed Thailand will be able to secure the base as a production hub for EV in ASEAN.
One of the world’s biggest EV players, China’s BYD, set up its first plant in the country, which opened early July 2024. BYD’s chairman and president decided to choose Thailand. He said, “Thailand offers stability despite the existence of political opposition parties, so our investments are considered safe and can be trusted.”
Support also for Hybrid Cars
The BOI Thai also introduced investment incentives for manufacturers of hybrid vehicles, with excise taxes for hybrids to be lowered from 2028 to 2032. The hybrid vehicles makers must invest at least 3 billion baht (> 100 Mio. USD) in the next four years, so that their customers can profit from the reduced excise tax.
Automotive parts manufacturers can benefit from Thailand as an emerging production location for EVs, if they can deliver competitive quality.
Focus on e-bikes for Delivery Services
The government also encourages its own citizens to convert to green vehicles. By converting to an EV, the consumers both profit from a subsidy by the government and from saving cost by cheaper energy consumption. The needs of the citizens and some corporations operating food delivery and ride app services for e-motorbikes are huge. Currently, riders must pay 300 to 500 THB to get a filling of gas. However, the electricity for the same distance as an e-motorbike would cost less than 100 THB.