Thailand plans new tax breaks to attract investment in hybrid cars

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Thailand has introduced tax breaks to attract $1.4 billion in investment to boost its electric vehicle industry. Hybrid vehicles will benefit from reduced excise taxes as part of Thailand’s strategy to become a leading EV manufacturing hub by 2030. OUR TAKE Thailand has announced a new set of incentives aimed at attracting significant investment in hybrid electric vehicles (HEVs) over the next four years. The plan, which aims to boost Thailand’s bid to become an electric vehicle (EV) manufacturing hub, includes significant tax breaks for automakers.

The secretary of the National Electric Vehicle Policy Committee revealed that the initiative aims to attract at least $1.4 billion by encouraging manufacturers to invest in Thailand’s EV industry. The move reflects Thailand’s strategic push to adapt to the global shift towards vehicle electrification. Its investment and innovation in the EV sector is expected to not only support Thailand’s economic growth, but also contribute to global efforts to reduce vehicle emissions.

Heidi Luo, BTW reporter What happened Thailand has significant tax incentives to encourage the production of hybrid electric vehicles (HEVs), targeting an influx of $1.4 billion in investment by 2028. The new measures, outlined by Narit Therdsteerasukdi, secretary of the National Electric Vehicle Policy Committee, include a reduced excise tax rate for eligible hybrids, which have both electric and internal combustion engines, starting at 6% from 2026, with a freeze on a fixed rate increase of two percentage points every two years.

Designed to encourage progress in Thailand’s automotive industry, the incentives apply to hybrid cars with fewer than ten seats that meet certain production and environmental benchmarks. “This new measure will support the transition of the country’s automotive industry towards vehicle electrification and the future development of the entire supply chain,” Narit said. “Thailand can be an electric car manufacturing base for both full vehicle and component manufacturing.

Also read: Expressway Authority of Thailand spearheads toll reduction initiative Also read: China’s BYD surpasses Tesla in the Singapore and Southeast Asia EV market Why it’s important To receive these tax benefits, manufacturers must invest at least $85 million in Thailand’s EV industry by 2027. The vehicles they produce must meet strict emission standards, use a high proportion of local auto parts and include advanced driver assistance systems. The policy is part of Thailand’s plan to become a centre for electric vehicle production in Southeast Asia by 2030.

The new measures include support for hybrid vehicles, extending existing incentives for fully electric vehicles and aiming to improve the entire supply chain. These incentives are making a difference. They build on previous government policies such as tax cuts and cash subsidies for EV buyers, which have already attracted 24 EV manufacturers to invest in Thailand from 2022, according to Narit. In the first half of 2024, registrations of battery electric vehicles increased by 19%. Sales of all electric vehicles increased by 41% in the same period, according to the Federation of Thai Industries.

Meanwhile, total domestic car sales fell by 24%, mainly due to lower demand for pickup trucks and traditional cars.