Car manufacturers benefiting from the government’s electric vehicle (EV) promotion initiatives are required to invest in the domestic production of essential EV components by 2026, according to the head of the Excise Department.
Ekniti Nitithanprapas, director-general of the Excise Department, outlined that three key components of an EV that must be assembled in Thailand are the electric motor, which converts electrical energy into kinetic energy for vehicle propulsion; the reducer, which operates similarly to a gearbox in traditional combustion engine vehicles; and the inverter, which converts direct current (DC) from the battery into alternating current (AC) to power the motor.
Mr. Ekniti stated that following the government’s introduction of the first phase (3.0) and the second phase (3.5) of EV promotion measures, automotive manufacturers engaged in the program have progressively set up production facilities in Thailand, with total investments exceeding 80 billion baht.
One of the prerequisites of these measures is the establishment of domestic production bases for EV manufacturing.
Under the EV support initiatives, participating companies must produce EVs locally to offset imports, equivalent to 100% of their sales in the first year. If a company fails to meet the local production requirement in the second year, it must manufacture 1.5 times the sales volume.
This stipulation encourages car manufacturers to establish production facilities in Thailand, thereby fostering new investments and industries that align with the department’s policy of promoting economic growth while also prioritizing environmental protection.
Mr. Ekniti further remarked that the department’s vehicle tax revenue, which fell by approximately 30% in the first 11 months of fiscal 2024, was predominantly due to a decrease in production and sales, along with tax reduction measures for EVs. Vehicle tax collection is one of the department’s primary revenue sources.
In the past, the Board of Investment approved measures to stimulate investment in EV battery manufacturing. Module-level investments are eligible for an eight-year corporate income tax exemption, while pack-level investments receive a five-year exemption. However, these levels are not eligible for subsidies from the EV promotion fund, whereas cell-level investments qualify for an eight-year tax exemption along with fund subsidies.
