Carmakers keen on EV scheme
Battery technology still not specified
The private automotive sector is interested in the government's promotional privileges for electric vehicles (EVs), saying the packages are attractive enough to draw future investment in eco-friendly vehicles.
Piengjai Kaewsuwan, vice-president of Nissan Motor Thailand, said the privileges given to battery electric vehicles (BEVs) are in particular enticing for carmakers when added to the investment privileges given by the Board of Investment (BoI) and the Finance Ministry's additional measures such as zero tariffs for imported completely built-up BEVs and an excise tax reduction for EVs to stimulate domestic demand.
"The BoI packages for BEVs are highly likely to attract new investment, particularly in electric batteries and motor manufacturing locally, as all of these projects are related to EVs and carmakers are now interested in making Thailand their production base," Mrs Piengjai said.
She said the Finance Ministry is offering to cut the excise tax to 5% from 10% for hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs). The excise tax for BEVs that release CO2 emissions below 100 grammes per kilometre is to be cut to just 2%.
Still, she said the tax incentives given to HEVs sound less attractive to carmakers.
Last Friday the BoI approved promotional privileges for EVs, including tax holidays of five to eight years. The privileges focus on production of HEVs, PHEVs and BEVs.
The promotions include passenger cars, pickup trucks and buses, with different rates of privileges based on production technology.
HEVs are entitled to a tariff exemption for imported machinery, while PHEV investment is eligible for a corporate income tax exemption for three years and import tariff exemptions on machinery.
PHEV investors who manufacture more than one key EV part will be entitled to an additional year of corporate income tax exemption per piece, but the combined tax exemptions cannot exceed six years.
BEV investment is entitled to five to eight years of corporate tax exemption. BEV investors who manufacture more than one key EV part will be entitled to another year of corporate income tax exemption per piece, but the combined tax exemption cannot exceed 10 years.
Battery electric buses will be entitled to tariff exemptions for imported machinery and a three-year corporate tax exemption. They are also eligible for an additional year of corporate income tax exemption per piece, with the combined tax exemption not to exceed six years.
The BoI added 10 more important EV parts that will enjoy corporate income tax exemption for eight years. They include batteries, traction motors, battery management services, DC/DC converters, inverters, portable electric vehicle chargers, electrical circuit breakers and EV smart charging systems.
A carmaker source who requested anonymity expressed concern about the EV packages, noting that the battery technology in the promotions has not been specified.
This means investors could build both nickel metal hydride (NiMH) and lithium-ion (Li-ion) batteries.
The source said NiMH is dated technology, used only in HEVs, while Li-ion is normally installed in PHEVs and BEVs, which could be recycled to be batteries for home use.
"If the government does not specify the battery technology, the industry will get stuck with making NiMH batteries [because they are cheaper] and HEVs, making it harder to develop PHEVs and BEVs in the long run," the source said.