Thai government seeks 7 billion baht for EV subsidies

Picture courtesy of official website

The Thai government plans to request an additional 7 billion baht in funding to support the promotion of electric vehicles (EVs). This effort aims to subsidise 35,000 EVs, with expectations for EV production facilities to compensate with 80,000 to 90,000 units in the first year. Over 30 automotive companies are participating in the initiative.

The Excise Department proposed a budget for next year to further support the EV promotion measures, amounting to an additional 7 billion baht. This funding is intended to subsidise 35,000 EVs, awaiting approval from the Cabinet.

Previously, the department had already disbursed over 7 billion baht in subsidies, supporting 40,000 EVs. The total subsidy expenditure thus far amounts to around 14 billion baht. The government’s goal is to have 30% of the vehicle production base consist of EVs by the year 2030, aligning with the 30@30 initiative, which aims to establish EV production bases in Thailand similar to those for combustion engine vehicles.

In 2022-2023, the Excise Department implemented EV 3.0 measures, which significantly reduced the excise tax rate from 8% to 2%. The government also provided a subsidy of 150,000 baht per vehicle, with the condition that manufacturers would have to compensate by producing vehicles in Thailand. Initially, companies were allowed to import EVs, with 23 automotive companies participating in the programme.

For the years 2024-2025, participating companies are required to establish production facilities in Thailand to meet the compensation conditions. Investments in these facilities have already reached 40 billion baht. According to the terms, companies must compensate for the imported EVs by producing approximately 100,000 units during 2022-2023.

If they meet the production requirements within the year, they only need to produce an equivalent amount. However, if delayed until 2025, they must produce 1.5 times the number of vehicles imported. The department anticipates that manufacturers will be able to produce 80,000 to 90,000 units in the first year.

Battery industry

Additionally, the EV promotion measures stipulate that by 2026, battery production or assembly must start in Thailand, as batteries are a crucial component of EVs. The battery industry must develop in Thailand, leading to upstream production. Currently, there is an investment of 25 billion baht in battery production facilities, with an additional 5 billion baht expected.

The EV 3.5 promotion measures, which began in 2024, continue to support EV adoption, albeit with reduced subsidies. The subsidy per EV has been lowered to 100,000 baht from the previous 150,000 baht under EV 3.0.

In 2025, the subsidy will decrease further to 75,000 baht per vehicle, and in 2026-2027, it will be reduced to 50,000 baht per vehicle. Currently, eight more automotive companies have signed agreements with the department, bringing the total to roughly 30 companies, encompassing nearly all automotive brands in Thailand, thus maintaining the country’s modern automotive production base.

Battery production is essential for the EV industry, and we are seeing substantial investments in this area noted the Director-General of the Excise Department, Ekniti Nitithanprapas. He also highlighted the importance of timely meeting production targets to ensure the success of the EV promotion initiatives, reported Khaosod.

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