Thailand Raises Excise Tax on Imported EVs to 35%, Promoting Local Production
nashnova research
Thailand's cabinet approved a hike in excise tax on imported battery EVs from 10% to 35%, effective 2027 — a move that hits Chinese brands hard, given they account for 96% of the country's EV import value, while leveling the field for Japanese automakers rooted in local production for decades.
What exactly changed?
Excise tax on imported battery EVs jumps from 10% to 35%, effective January 1, 2027.
This means → imported EVs will be taxed at the same rate as combustion vehicles. The tax advantage EVs once enjoyed is wiped out in one move.
Industry Minister Varawut Silpa-archa said the goal is to protect supply chains and investors that have backed Thai auto production for decades — he named Japanese automakers specifically.
Why act now?
Federation of Thai Industries data: EV passenger-car sales hit 161,532 units in Jan–Sep 2026, or 31% of total sales.
Local EV production in the same period was just 70,472 units. In plain terms = for roughly every 2.3 EVs sold, only 1 was made in Thailand; the rest were imported.
Commerce Ministry figures show EV imports totaled about $2.36 billion, with 96% coming from China. This reflects a level of import dependence that policymakers could no longer ignore.
Who gets hit hardest?
Chinese brands take the biggest blow. They benefited from zero tariffs under the ASEAN–China FTA (effective since 2010), giving them a clear price edge.
BYD and Great Wall have factories in Thailand, but not every model is locally produced — some still arrive as fully built imports. This means → the new rate will pressure them to shift more models onto Thai assembly lines.
Japanese automakers had complained that their locally assembled hybrids (taxed at 6%–15%) and combustion cars (25%–35%) were competing against imported EVs taxed at just 10%. That gap is now closed.
What does Thailand want?
Excise Department chief Pornchai Thiraveja said the restructuring aims to drive local investment and position Thailand as a regional EV production hub.
Federation of Thai Industries chair Pimjai Leeissaranukul put it plainly: "The tax structure should be a mechanism to attract real investment and build supply chains in Thailand."
In plain terms = Bangkok's signal is clear — you can sell cars here, but you need to build them here.
Can it actually work?
Kasikorn Research Center analyst Rujipan Assarat sounded a warning: with a dim economic outlook and weak demand, auto production may not bounce back quickly.
This means → higher taxes can push companies to build factories, but if consumers cannot afford cars, that capacity may sit idle.
The central test: whether the new tax can boost local production without crushing overall EV demand — those two goals pull in opposite directions.
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