Local automotive groups in Thailand are pressing the government to impose a 32% import duty on electric vehicles from China to safeguard domestic manufacturing and supply chains.
Details of the EV3.5 Incentive Scheme
The EV3.5 program, active from 2024 to 2027, provides tax reductions and subsidies to automakers investing in battery electric vehicle (BEV) assembly plants in Thailand. To promote local production, it mandates a specific production-to-import ratio: automakers must manufacture two BEVs locally for every one imported during 2024-2025, increasing to three local vehicles per imported unit by 2027.
Growing Concerns Over Chinese Strategies
Industry executives worry that Chinese manufacturers might reduce or cease local production after fulfilling the minimum EV3.5 requirements. An Electric Vehicle Association of Thailand (EVAT) executive, speaking anonymously, highlighted the potential damage to Thailand’s BEV sector, auto parts producers, and suppliers.
Chinese BEVs currently enter Thailand tariff-free under the ASEAN-China Free Trade Agreement, though other duties apply based on vehicle type. Participants in EV3.5 gain additional duty exemptions, enhancing their market edge.
Proposed Protective Measures
EVAT, alongside nine other industry associations, plans to submit a proposal urging a 32% import duty on Chinese BEVs. They also seek stricter local content rules, raising the domestic sourcing requirement from 40% to 80% for global EV producers receiving Board of Investment incentives. This change aims to bolster Thailand’s supply chain and preserve jobs.
The Federation of Thai Industries represents about 1,700 auto parts firms, mostly small and medium-sized tier 2 and tier 3 suppliers, which face significant risks without these protections. Tier 1 suppliers typically operate as subsidiaries of international carmakers.
Recent Policy Adjustments and Ongoing Vigilance
Slow car sales have led the National EV Policy Committee to relax production rules, allowing each BEV made for export to count as 1.5 units toward the quota for greater flexibility. Despite this, leaders remain cautious about Chinese firms reshaping strategies to favor imports.
“A surge of Chinese EVs would harm local BEV manufacturing, auto parts makers, and suppliers,” the EVAT executive stated. The groups intend to meet with officials from the Finance and Industry ministries to advance their proposals urgently.
