Methin Changtor, Asia Powertrain Forecasting Manager
14 June 2018
14 June 2018
The Thailand government has increasingly favoured policy designed to push the country, through an industry incentive programme, towards becoming a significant producer of electric vehicles of various types (xEVs). OEMs that locally produce xEVs along with at least one of 13 key components will receive an import tax exemption for machinery and corporate tax exemption. Additionally, OEMs using locally built batteries will also benefit from a special excise tax rate. For example, an OEM producing a Hybrid Electric Vehicle (HEV) with a locally built battery will received 50% excise tax reduction along with a machinery import tax exemption, while a full Battery Electric Vehicle (BEV) will be subject to a mere 2% excise tax rate alongside an additional corporate tax exemption. See table.
At first glance, the programme appears to have been relatively successful. Five key OEMs, including Toyota and Honda, have applied for the HEV programme and an additional three have applied for the Plug-in Hybrid Electric Vehicle (PHEV) programme leading to a combined estimated production volume of over 400,000 units. Other OEMs can also apply for PHEV and BEV programs until the end of 2018. However, none have applied for the BEV program where the incentive is at its highest.
The policy, therefore, has got off to a good start but there are still some difficulties ahead. The government will need to improve other xEV-supporting infrastructure, such as enhancing capacity in the power grid and adding charging stations, both of which will require far more significant investment in order to build confidence of both OEMs and consumers. In addition, there is no price subsidy for xEV buyers, something that has been successful in other countries in creating an initial surge in demand. So the subsequent xEV policy, beyond that currently in place, over the next few years will be crucial to the success of xEV prodution.