Thai automotive associations sign joint statement to government proposing eight measures to prevent EV production collapse

Thailand's EV policy combines consumer subsidies, excise tax reductions and temporary import duty concessions with local production requirements. Under its EV 3.0 and EV 3.5 schemes, automakers were allowed to import EVs at preferential rates and benefit from government purchase subsidies, but were later required to establish local production and compensate for imported vehicles through domestic manufacturing.

Launched in 2024, Thailand's EV 3.5 policy is the second phase of its programme promoting electric vehicles. It was designed to accelerate EV adoption while building a domestic EV manufacturing base. 

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So far, Thailand's EV policies have helped it rapidly grow EV sales while simultaneously encouraging automakers to invest more than $4 billion in local factories, battery production, charging infrastructure and component manufacturing. But with the EV 3.5 scheme coming to an end in 2027, automotive groups in Thailand have raised concerns that without these incentives, domestic production will struggle to compete with imported vehicles.

Addressing these concerns, ten Thai automotive associations submitted a proposal to the government of Thailand urging it to take action in order to ensure fair competition between domestic automotive manufacturers and importers of finished vehicles from other countries, including China. Many EVs made in China can currently enter Thailand with a 0% import tariff as a result of the ASEAN-China Free Trade Area (ACFTA) which has eliminated tariffs on over 90% of imported goods.

Suroj Saengsanit, president of the Electric Vehicle Association of Thailand (EVAT) – one of the groups behind the proposal – said that blocking EV imports or making imported EVs more expensive for consumers was not the proposal's intention, instead calling for the Thai government to create the necessary conditions for fair competition between importers and those that have invested in domestic manufacturing.

Together, the groups proposed eight measures that they believe would help level the playing field and support domestic vehicle production beyond 2027.

Excise tax reforms and investment-linked import quotas

The first measure the coalition of industry associations called for was the introduction of tax reforms. Specifically, it proposed a widening of the gap in excise duties between domestically produced vehicles and imported ones. The groups asserted that the current 8% difference in excise tax between the two categories is insufficient to truly incentivise domestic production.

They also called for import quotas to be tied to domestic production volumes and local investment, with companies manufacturing vehicles in Thailand and investing in the country's EV infrastructure rewarded with limited import quotas at lower tax rates.

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Stricter local content mandates

Looking further upstream, the coalition has said that the local content threshold for vehicles, which is currently 40%, needs to be strengthened and enforced more rigorously. The groups argued that local production is not enough to support the automotive supply chain industry in Thailand if local parts and materials are not used too. Ensuring that all OEMs are complying with local content requirements would mean that the benefits of localisation are shared throughout the supply chain, with tier suppliers not left out as OEMs import parts and materials from abroad.

Tax incentives linked to use of Thai-made common parts

Encouraging OEMs to use standardised parts that can be used in both EVs and ICE vehicles is another initiative the coalition has said would support the nation's tier suppliers. By linking tax benefits to the use of common parts made in Thailand, it hopes that the government would be able to limit the threat posed to Thai automotive parts suppliers by the shift towards electric vehicles.

Improved investment promotion policies

The coalition has also called for changes to Thailand's investment promotion regime. Specifically, it wants the government's Board of Investment (BOI) to stop granting investment incentives in segments where Thai companies already possess the capability to operate independently, unless foreign investors enter through joint ventures in which Thai shareholders hold at least a 40% stake.

The groups argued that investment incentives should be targeted at activities that bring genuinely new capabilities to Thailand rather than competing directly with existing domestic firms. They also called for stricter oversight to ensure that promoted projects are undertaking genuine production activities and creating local employment.

Government support on raw material costs

Another proposal focuses on the cost disadvantage faced by Thai manufacturers when sourcing key industrial materials. The coalition has urged the government to pursue government-to-government negotiations aimed at securing more competitive prices and supply arrangements for strategic inputs such as aluminium and rare earth materials.

According to the groups, Chinese manufacturers often benefit from lower raw material costs, giving them a significant competitive advantage. Improving Thai manufacturers' access to critical materials at comparable prices would help level the playing field for local production.

Stronger rules of origin enforcement

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The coalition has also proposed tighter verification of certificates of origin for products claiming Thai provenance. It suggested that authorities should be able to trace supply chains back to at least tier 3 suppliers in order to verify where components are actually produced.

The aim of this would be to prevent foreign-made products from being incorrectly classified as Thai products in order to qualify for incentives or preferential treatment. The groups argued that stronger origin verification would ensure that industrial policies designed to support local manufacturing benefit genuinely local production.

Domestic testing and validation

The final proposal centres around expanding vehicle testing and validation activities within Thailand. The coalition has suggested that advanced driver assistance systems (ADAS) and other intelligent vehicle technologies should be tested and calibrated in Thai laboratories rather than overseas.

The groups shared their belief that requiring more testing work to be conducted domestically would help develop local technical expertise, strengthen research capabilities and support the transfer of advanced engineering knowledge to Thai workers and institutions.