Thailand: Mass-market eco-car stimulus on the way

The Industry Ministry will roll out an incentive programme to encourage six eco-car manufacturers to make electrified eco-cars¬ after finding that the electric vehicle scheme was ineffective at boosting mass-market production of EVs.¬
“The ministry is working on a new programme called Eco EV, which is aimed at offering incentives for eco-car makers,” said Nattapol Rangsitpol, director-general of¬ the Office of Industrial Economics (OIE). “We initiated Eco EV in September, while the cabinet meeting has acknowledged the ministry’s policy and the OIE expects to finalise¬ the incentive framework by the end of this year.”¬
The EV scheme also allows any applicant for hybrid EVs, plug-in hybrid EVs and battery EVs to combine production volume with the government’s eco-car scheme,¬ which requires a massive volume of 100,000 cars a year.¬
But Mr Nattapol said the current programme does not specify EV types, so car makers can produce niche models that require small production volumes and invest only in¬ assembly lines for finished cars.¬
“When EVs remain a niche segment with small volume, there is no investment in core technology from EV-related products as the government expected,” he said.¬
In addition, the EV scheme offers new excise tax incentives for hybrid EVs and plug-in hybrid EVs that qualify for Board of Investment (BoI) privileges, with the levy¬ decreasing from 25% to 5% based on CO2 emissions.¬
2982590The battery EVs will be taxed at 2%, a sharp drop from 10%.¬
But this tax privilege is solely intended to promote local EV production and will expire in late 2025.¬
Mr Nattapol said there are gaps for CO2 emission of 100g/km between eco-cars and EVs; for example, the eco-cars are subject to 12-14% rates while hybrid and plug-in hybrid EVs enjoy 5%.¬
The eco-cars, releasing CO2 at 120g/km, are taxed at 17%.¬
“We are figuring out the excise tax terms in a bid for fairness among all eco-friendly cars in the country, so the Eco EV can be the tax incentive framework for the buyer side,¬ ” Mr Nattapol said. “The OIE expects retail prices of hybrid versions to stay between 500,000 and 600,000 baht and the plug-in hybrid and battery EVs to cost 700,000 baht.”¬
The government’s eco-car scheme was issued in two phases, in 2007 and in 2013. There are six Japanese manufacturers signed up: Nissan, Honda, Mitsubishi, Suzuki, Toyota and Mazda.¬
The eco-car project is set to be the second product champion for the country after Thai-made pickup trucks, which have led the country to be ranked in the world’s top¬ five light-commercial-vehicle makers by production volume.¬
According to the Federation of Thai Industries (FTI), eco-car output from the six manufacturers stood at 245,567 units from January-August. Of the total production,¬ 133,768 eco-cars went to the domestic market while 111,799 were shipped worldwide.¬
The FTI also reported that the country made a total of 2,315,000 eco-cars from March 2010 to August 2018.¬
The OIE said sales of eco-cars accounted for 54% of the passenger car market in the first eight months of this year, up from 44% in 2017.¬
“The government aims to protect the eco-car scheme that attracted massive investment from six manufacturers, as well as the EV scheme, which should get new investment¬ flows from not only car assemblers but also parts makers,” Mr Nattapol said. “We just want all automotive schemes to result in the highest possible benefit.”¬