Economy Thaksin's EV Tax Plan to Shield Thai Auto Industry

[webfact]

Picture courtesy of Bloomberg

 

Former PM urges local content rules to boost industry growth

 

Could the electric vehicle (EV) surge threaten Thailand’s automotive sector? Former Prime Minister Thaksin Shinawatra believes so, advocating for significant tax reforms to defend local carmakers against foreign competition.

 

Thaksin proposes a hefty excise tax on imported EVs with minimal local content to safeguard Thai manufacturers. His concerns arise from free trade agreements, especially the ASEAN-China FTA, which has led to an influx of tariff-free EVs undermining domestic players.

 

He suggests mandating a minimum local content level in imported EVs, like car seats, to ensure the Thai automotive sector’s growth. The FTA with China removed import tariffs, enabling cheaper foreign EVs to invade the market.

 

The Excise Department is now considering revising the tax structure. The new proposal would lower taxes on vehicles with a high percentage of local components, promoting the use of Thai-made parts and protecting the industry.

 

Deputy Finance Minister Paopoom Rojanasakul stated, “The goal is to support the domestic auto parts industry by encouraging the use of locally made components.”

 

Some analysts feel these measures might also address potential tariff threats from the United States, which could affect Thailand’s exports.

 

Economist Sompop Manarungsan noted that the reduced tariffs on American vehicles are unlikely to impact Thailand’s market. US manufacturers struggle to compete with Southeast Asian carmakers on parts costs and model updates. Additionally, despite low tariffs, American vehicles barely penetrate markets like Japan.

 

As Thailand shifts towards becoming an EV production hub, the rise of electric vehicles offers both opportunities and challenges. From 2022 to 2024, EV registrations for BEVs, PHEVs, and HEVs surged, with significant investments in production and infrastructure.

 

However, intense foreign competition has led some Chinese EV firms to withdraw, returning subsidies and facing penalties for not meeting local production criteria, according to the Bangkok Post.

 

Thailand’s bold EV strategy is vital for its future as a regional export hub, with ongoing developments in manufacturing, charging networks, and battery production.

 

By 2030, Thailand aims to lead Southeast Asia in EV production, leveraging locally produced components to enhance the industry and promote environmental benefits.

 

  Adapted by ASEAN Now from The Thaiger 2025-08-04

 

[ukrules]

This is exactly the kind of behaviour that encourages reciprocal tariffs - but this time they're playing with both the US and China.