12 jan 21

Thailand is accelerating its EV ambitions

An organic, demand-side uptake of EVs is almost impossible without incentives: very few consumers are willing to put down the extra dollars and accept the limitations of electric driving, just because of ecologic or high-tech affinities.

In addition, the EU/US consumer is better informed, has access to more EVs and can enjoy a better infrastructure than the Thai consumer. So, when Thailand is putting EV transition on the table, it’s at least worth looking into how the South-East Asian country deals with the challenge.

Status Quo and Objectives

Thailand is, today, one of few Asian countries that includes emissions in its tax calculation; currently, the excise tax varies between 10% for EVs up to 50% for ICE vehicles – the popular pick-up trucks, defined as “professional vehicles”, are excluded from the high taxation. It’s worth mentioning that Thailand produces Toyota’s Hilux, an extremely popular vehicle in the region.

Some facts about Thailand: Bangkok, alike other major cities in Thailand, is struggling with air quality and a lack of infrastructure (public transport, road infrastructure). The country has become a major car manufacturing location for Asian countries and the per capita GDP sits roughly at USD 6500 and is growing.

The Thai Government aims to achieve 30% of EV production by 2030. Incentives are there, but benefit manufacturers rather than consumers.

The Plan and its Limitations

The Government is now looking into accelerating consumer uptake of EV to support the demand-side. Practically, conversation are being held with the automotive industry to increase the excise tax on ICE vehicles and put trade-in schemes in place that favor EVs.

The plan needs to be worked out in more detail, of course, but it comes down to making non-EV vehicles more expensive. This will inevitably lead to reduced – overall – car sales, as most Thai people struggle to put down the investment for a new car (car penetration is 225/1000 according to Malaysian’s automotive news editor Paultan). It’s uncertain at this stage if OEMs will embrace the idea of losing car sales.

Thailand has previously, and relatively successfully, implemented trade-in schemes whereby consumers benefit from an incentive if they keep a vehicle for an agreed duration. The Thai Government is now looking into a similar scheme for EVs.

A first analysis of the intentions is positive, but nonetheless the plan needs to be worked out much more as it’s missing a few elements: charging infrastructure, of course, but also access to affordable EV. Also, the Government has now an opportunity to look at transportation and infrastructure from a wider angle, and is not communicating, at least not the press, a total vision of where the country should be in 10 years. If a total transformation is the goal, it will need the Thai population to understand and underwrite the plan; if however the objective is limited to raising taxes on ICE vehicles, it’s very unlikely that the a tax raise will achieve the full potential of electrification.

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Picture Credit: Shutterstock

Authored by: Yves Helven