20 juil 22

Thailand in front of EV line: new tax incentives

First of the Southeast Asian countries to implement variable vehicle registration costs based on CO2 emissions, Thailand continues to put sustainability on top of the agenda. To incentivize consumers and corporates to shift from ICE to EV, the Thai Government has proposed a set of new tax discounts for EVs and charging infrastructure.

Thai automotive industry

Over the last 50 years, Thailand has developed to become Southeast Asia’s number one automotive producer (12th producer globally), putting out 2.5 million vehicles and worth close to USD 30  million. The industry contributes a significant 12% to the country’s GDP.

This is obviously for good reasons. Thailand is ideally situated at the center of the Indochina peninsula, and has world-class infrastructure for transportation by land and by sea to connect the country with over 2 billion consumers in China and Southeast Asia. The country has skilled labor in abundance, and is well organised to welcome large industries.

Eager to maintain its leadership position, Thailand needs to keep up with global automotive trends – and that’s electrification – both for export and domestically.

Previous consumer incentives

Thailand was amongst the first Asian countries to propose tax incentives for eco-friendly vehicles. Already back in 2015, Eco Cars (below 100 g/km NEDC) were subject to 12% excise duty, a 5% discount compared to vehicles emitting more than 100 g/km.

Other incentives, to promote the domestic automotive industry, allowed Thai consumers to acquire cars at significantly discounted MSRPs at the condition of keeping the vehicle for a period of 5 years; this incentive plan was abandoned, as it distorted sales spread and, in the long run, didn’t deliver sustainable benefits for the economy.

2022 incentives

The Thai Government is proposing an extensive incentive scheme for EVs, but also for charging infrastructure:

  • A 5-year corporate tax exemption for smaller charging stations
  • A 3-year additional tax benefit for smaller charging stations
  • Subsidies from THB 70.000 (USD 1.913) up to THB 150.000 (USD 4.100)
  • Reduced excise duty for EVs with a battery capacity exceeding 30kWh for CBU vehicles (CBU stands for “completely built-up” and refers to vehicles that are imported, rather than locally produced or assembled)
  • Excise tax reduction from 8% to 2% for EVs

This “phase 1” of the tax incentives will be finetuned gradually to promote mainly locally produced EVs, and aims for a 50% EV production target by 2030.

Automotive industry

This obviously sounds like music in the ears of regional car manufacturers. Especially the Chinese OEMs are keen for a leadership position on the Thai market.

  • Great Wall Motor has entered the market in 2021 and has sold 5000 units so far
  • Ora Good Cat has sold its entire stock of 500 launch editions in 58 minutes
  • SAIC (owner of the MG brand) has sold 4500 units in 2021 and expects to do more this year

Thailand is an excellent gateway for Chinese manufacturers to access other Southeast Asian countries within the tariff-free ASEAN region, and in addition allows for tariff-free import from China as part of the ASEAN-China free trade pact.

For the Fleet Manager

Even if the economic sense to select EVs in Thailand becomes more than ever obvious, from a sustainability (GHG Accounting) perspective, it does not deliver massive benefits. The output of producing 1 kWh in Thailand is the equivalent of 6.7 kg CO2e/100km (for comparison: 0.8 kg in France, 2.4 kg in Belgium, 5.1 kg in Germany).

In addition, the country’s “readiness” (charging infrastructure, willingness to pay a premium for EVs…) is still relatively low (0.2% versus 11.3% in France, 11.2% in Belgium, 13.5% in Germany); it is to be expected that this number will rise rapidly over the next years. [figures provided by OviDrive]

Authored by: Yves Helven