Summary · why it matters
The National Electric Vehicle Policy Committee, known as the EV Board, chaired by Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas, has approved the framework for restructuring the excise tax on electric vehicles using a three-tier rate structure. According to Porchai Teeravej, Director-General of the Excise Department, electric vehicles using domestic parts, or local content, will pay the lowest tax rate; electric vehicles using both imported and domestic parts will pay a higher rate; and fully imported electric vehicles, or CBU, will pay the highest rate. The imported tier will be taxed first in order to reduce the high proportion of imports, and the private sector agrees while discussing a grace period. Under the framework, the highest tier must rise above 10%, though no exact figure has been set. The EV Board has assigned the Ministry of Finance and the Excise Department to continue discussions, with a conclusion expected within September before being proposed to the Cabinet. Dr. Rujiphan Assarat, Assistant Managing Director of Kasikorn Research Center Co., Ltd., noted that most vehicle imports today are battery electric vehicles, or BEVs, at about 72% of all imports, followed by hybrids and plug-in hybrids at 13% and combustion-engine vehicles at 15%. This year, BEV sales are expected to reach one-third of domestic car sales, but the concern is that about 60% of BEV sales are imported vehicles. Under the three-tier tax proposal, the first group covers those with domestic production plants, which will receive tax rates equal to the structure announced effective January 1, 2026, with added conditions on the local content proportion that are still under discussion. There are two scenarios on the table: local content above 40%, and local content of 30% plus e-Parts. If the conditions are met, they will receive rates under the current structure, where BEVs are at just 2%, while hybrids depend on the volume of carbon dioxide emitted. The second group covers those without domestic plants, with rates under discussion at more than 10%, and an import quota set at no more than 10% of the production capacity applied for with the BOI, with production required to compensate for imports. For BEV imports, compensation production is on a 1-to-1 ratio if producing BEVs, or 1-to-2 if producing hybrids. For hybrid imports, compensation production may be either hybrids or BEVs. The third group covers CBU imports with no plan to build a plant in Thailand, which will pay a high rate of more than 30%, though this is not yet finalized. Kasikorn Research Center assesses that this measure will tend to reduce imported vehicles, lower price competition, and push car prices higher, but it will increase vehicle production. Thai vehicle output is expected to return to expansion in 2027 at 4.9%, after an estimated contraction of 1.8% this year.
