Excise mulls tax break to spur EV production

Excise mulls tax break to spur EV production

An electric vehicle charging at a motor show. An excise tax waiver for full EVs is under consideration.
An electric vehicle charging at a motor show. An excise tax waiver for full EVs is under consideration.

The Excise Department is poised to waive the tax imposed on full electric vehicles (EVs) in a fresh move to encourage makers to start producing the cars.

In return for the tax break, however, they must begin manufacturing full EVs earlier than the three years as required by the Board of Investment (BoI) for those that won incentives, said Patchara Anuntasilpa, director-general of the Excise Department.

The BoI approved investment privileges by cutting the excise tax to 2% for 15 car makers planning to make full EVs in Thailand. Those not awarded incentives are subject to an excise tax of 8% for making full EVs.

Although car makers are liable for a mere tens of thousands of baht under the 2% excise tax, the tax waiver will be a symbolic show of the government’s support for building full EVs, Mr Patchara said.

The Excise Department will conclude the planned tax waiver as soon as possible, he said.

EVs are one of the government’s 12 targeted industries identified as new engines of economic growth under the S-curve policy.

Mr Patchara said full EV prices are relatively high at about 2 million baht each, with battery cost accounting for half the price, so the government must encourage battery makers to set up plants in Thailand and recycle or reuse batteries to make them affordable.

Batteries, battery management systems, traction motors and DC converters are major components of EVs.

In related news, Mr Patchara said the Excise Department will offer tax privileges on top of those offered by the BoI to car makers that build mild hybrid cars in Thailand, but they are required to start producing such cars within three years of receiving BoI privileges.

Some makers have asked the department to levy a low tax on mild hybrids, which are more affordable than full EVs.

Mild hybrids have internal combustion engines equipped with a device that generates electricity stored in a battery with a capacity of 60 volts when driving. Full hybrids have batteries exceeding 60 volts.

There are four car categories under the Excise Department’s tax structure, and the levy varies depending on carbon emissions.

The four categories are passenger cars powered by gasohol, natural gas vehicles and hybrid cars; pickup passenger vehicles and pickups; eco-cars; and EVs and fuel cell cars.

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