Thailand's electric vehicle board has officially agreed in principle to introduce a three-tier excise-tax structure that would impose the lowest rate on EVs made in Thailand and the highest on fully imported models, as confirmed by Pornchai Thiraveja, excise department chief after a meeting at the Finance Ministry. Under one proposal, the excise rate for EVs and REEVs that do not use Thai-made components would increase from the current 10% to between 31% and 39%, with vehicles ordered before any tax increase taking effect retaining their existing rates. A Finance Ministry source estimated that if the excise rate exceeded 30%, tax on a vehicle valued at THB 1 million could rise from THB 100,000 to approximately THB 300,000-THB 400,000. The EV board has emphasized a policy of determining rates based on the level of investment, production, and use of domestically produced parts, with a grace period to give automakers time to adapt to the new tax regime, though its duration has yet to be determined. The National Electric Vehicle Policy Committee is due to meet on September 10th, with the Prime Minister expected to chair discussions on future support for different vehicle categories, as reported by Segment Y Automotive Intelligence.
The tax policy shift comes as Thailand's EV market experiences unprecedented growth, with electric and hybrid vehicles accounting for 55% of new cars in the first seven months of 2026, marking the first time combined registrations of EVs, hybrid, and plug-in hybrid vehicles outpaced those of internal combustion engine vehicles, according to the Board of Investment. However, this growth has been dominated by Chinese brands, which held 89% of Thailand's EV market by the end of 2025, exploiting a critical loophole in Thailand's EV policy. Thailand's 2003 free trade agreement with China means that China-made EVs currently enter tariff-free, creating an overwhelming advantage over the formal 80% baseline import tariff for cars from most other countries, with only Japan receiving a 20% rate under a separate bilateral agreement. The scale of price competition has been dramatic, with Chinese EV brands cutting prices 10.2% between Thailand's 2023 and 2024 motor show seasons, followed by a further 13.1% cut by early 2025, before moderating to 2.7% later that year, according to Thai research institute Krungsi. Price gaps of up to 50% between Chinese and non-Chinese EV models were apparent as of May 2026, as reported by Rhodium Group.
The proposal addresses the surge of low-priced Chinese models that intensified competition and put pressure on Thailand's domestic auto-manufacturing industry. The influx of imported models has since fueled aggressive price competition, putting pressure on locally produced vehicles and Japanese automakers that have dominated Thailand's car industry for decades. The shift marks an effort to rebalance a policy that initially used low import barriers to accelerate EV adoption and attract Chinese manufacturers, with Thailand remaining a major regional production and export hub for car manufacturers such as BYD and Toyota Motor. The new three-tier structure specifically targets imported EVs without factories in Thailand, while favoring domestic production and right-hand-drive EV exports. The country is facing growing competition for automotive investment from elsewhere in Southeast Asia, with Indonesia and Vietnam offering incentives to attract new models and factories, though Chinese automakers may attempt to circumvent the new system via local assembly operations.
Thailand is Southeast Asia's largest auto-production hub, built on decades of Japanese investment and an extensive network of parts suppliers, with the industry accounting for about 3% of gross domestic product and employing more than half a million people. The country has attracted investment into EV manufacturing, with authorities wanting to use this investment to develop the country's position as a regional vehicle production and export hub. The previous EV3 and EV3.5 support programmes have attracted around eight to 10 factories, including operations involving BYD, MG and GWM, with investment in electric vehicles and parts reaching approximately THB 140 billion and domestic production of about 170,000 EVs. Thailand now has potential EV production capacity of up to 380,000 vehicles a year, with the sector creating around 25,000 jobs. The government is seeking to maintain Thailand's Japanese automotive manufacturing base while continuing to attract EV investment from China and other countries, with the next objective to increase manufacturing volumes sufficiently for Thailand to become an EV export hub.
The Finance Ministry and Excise Department have the authority to determine excise tax rates before submitting them to the Cabinet for approval, with Lavaron Sangsnit, permanent secretary for finance, expecting the proposal to be submitted by the end of September. As reported by Segment Y Automotive Intelligence, "We are not yet able to disclose the proposed adjustment to EV excise tax rates because it requires Cabinet approval. The Finance Ministry and Excise Department are responsible only for preparing the information. We believe it would be best to submit the proposal to the Cabinet as soon as possible." The three-tier tax mechanism has already received approval in principle from three automotive associations and private-sector operators attending the meeting. The Excise Department will expedite talks with the Finance Ministry and private sector to finalise the figures and submit them directly to the Cabinet for approval, without needing to return the proposal to the EV Board. The government plans to implement the highest tax rate first to reduce the number of imported EVs from companies not investing in Thailand, with the National Electric Vehicle Policy Committee due to meet on September 10th to finalize future support measures.
