Subsidies for purchases of electric vehicles will be reduced to a maximum of 100,000 baht starting in 2024, from 150,000 baht now, the National EV Policy Committee announced on Wednesday.
The change is part of a broader package of revisions to EV incentives that will be in effect from 2024-27. Other incentives for vehicle producers and battery makers are intended to reduce their costs and ultimately make electric vehicles cheaper, thereby reducing the need for consumer subsidies.
Authorities have been signalling for some time that the consumer rebates would be scaled back from the current range of 70,000 to 150,000 baht per unit to between 50,000 and 100,000 baht.
The revised subsidies are based on vehicle type and battery size, said Narit Therdsteerasukdi, secretary-general of the Board of Investment. They are as follows:
- For electric cars and pickup trucks priced below 2 million baht with a battery size of at least 50 kilowatt-hours, subsidies will range between 50,000 and 100,000 baht per vehicle. For cars with a battery size of less than 50 kWh, subsidies will range between 20,000 to 50,000 baht.
- For electric motorcycles priced below 150,000 baht, with a battery size of at least 3 kWh, subsidies will range between 5,000 and 10,000 baht per vehicle.
Under the so-called EV 3.5 policy, Mr Narit said import duties would be reduced by up to 40% for completely built electric cars in the initial two years (2024-25). This applies to models priced up to 2 million baht, while the excise tax rate will be cut from 8% to 2% for electric cars priced up to 7 million baht.
Subsidies have been credited for a surge in EV sales this year. Mr Narit said new EV registrations in the first nine months of 2023 totalled 50,340, an increase of more than 7 times from the same period last year.
BMI, the research arm of the ratings agency Fitch, recently estimated that the country’s EV penetration rate would reach 8.7% of all vehicles by the end of this year, a substantial increase from 3.8% in 2022.
To encourage investment in EV production, approved manufacturers will be allowed to bring in one imported car for every two domestically produced cars in 2026, and the ratio will increase to 1:3 by 2027
Batteries of both imported and locally made electric cars must undergo testing according to global standards from the National Automotive Testing and R&D Infrastructure Project.
“The EV 3.5 measure emphasises the determination of the Thai government to drive a sustained policy in supporting Thailand’s role as an electric vehicle hub in the region,” Mr Narit said. “It aims to attract new investors to establish manufacturing bases in the country while urging existing entrepreneurs to transition into the electric vehicle industry.”
Chinese EV makers, including BYD and Great Wall Motor, have committed to invest $1.4 billion in new production facilities in Thailand, which has long been dominated by Japanese auto majors.
Chongqing Changan Automobile last week became the latest Chinese EV maker to sign a deal to build a factory locally with a target to begin production in 2025. The country is also in talks with other Chinese players such as Geely and Chery, according to the BoI.
According to Mr Narit, the current EV 3 support programme featured a total of 13 participating brands from 15 companies, including electric cars, pickups and motorcycles. Cumulative investment since 2017 in the EV industry, including vehicles, batteries, components and charging stations, has reached 61.4 billion baht, he added.
The Federation of Thai Industries (FTI) said the incentives under the EV 3.5 package were “appropriate” for current conditions, even though they are less attractive than those of its predecessor.
The EV 3 programme was launched while the country was just beginning to build a domestic EV industry and needed foreign investors with technological know-how, said Surapong Paisitpatanapong, vice-chairman of the FTI and spokesman for its Automotive Industry Club.
Mr Surapong said he believed EV makers who participated in the existing programme would not be at a disadvantage, despite their worries over the higher prices of some locally made EVs compared to imports.
Prime Minister Srettha Thavisin last month ordered state agencies to buy EVs to replace older vehicles, build more charging stations nationwide and make insurance for EVs affordable.
The directive is part of a broader campaign to promote greater adoption of green transport to reduce carbon emissions and develop the country into a production hub for EVs and parts.