Thailand's EV 3.5 policy is a new set of incentives and measures aimed at promoting the electric vehicle (EV) industry in Thailand from 2024 to 2027. Here are the key points about this policy:

1. Timeframe: The EV 3.5 policy will be in effect for 4 years, from 2024 to 2027.

2. Objectives:

• Promote continuous growth of Thailand's EV industry

• Attract new investors to establish EV manufacturing bases in Thailand

• Encourage existing manufacturers to transition to EV production

• Support Thailand's goal of becoming a regional EV manufacturing hub

3. Key incentives:

• Purchase subsidies:

  • For electric cars and pickup trucks priced under 2 million baht with battery size ≥50 kWh: 50,000-100,000 baht per vehicle

  • For vehicles with battery size <50 kWh: 20,000-50,000 baht per vehicle

  • For electric motorcycles priced under 150,000 baht with battery size ≥3 kWh: 5,000-10,000 baht per vehicle

• Import duty reductions:

  • Up to 40% reduction for completely built electric cars priced up to 2 million baht in the first two years (2024-2025)

  • Excise tax cuts: from 8% to 2% for electric cars priced up to 7 million baht

4. Local production requirements:

• Companies importing EVs must commit to local production at specified ratios:

  
  

1:2 ratio (1 import : 2 locally produced) in 2026

1:3 ratio in 2027

5. Battery standards:

• Batteries for both imported and locally made EVs must meet global testing standards

6. Continuation from EV 3.0:

• The EV 3.5 policy builds upon the previous EV 3.0 policy, which expired in December 2023

• Companies participating in EV 3.0 can transfer to EV 3.5 and continue receiving benefits

7. Expected impact:

• Maintain momentum in EV sales growth

• Further establish Thailand as a regional EV production hub

• Support the country's goal of having EVs constitute 30% of total vehicle production by 2030

Meanwhile, the reduction in import duties under Thailand's EV 3.5 policy is likely to have several significant impacts on the EV market:

1. Increased EV sales: The import duty reduction of up to 40% for completely built electric cars priced up to 2 million baht in 2024-2025 will make imported EVs more affordable. This, combined with other incentives like purchase subsidies and excise tax cuts, is expected to boost EV sales and adoption in Thailand.

2. Enhanced market competition: Lower import duties will allow more international EV manufacturers to enter the Thai market at competitive prices. This increased competition is likely to benefit consumers through wider choices and potentially lower prices.

3. Short-term boost for imported EVs: In the initial two years (2024-2025), imported EVs will become more price-competitive due to the duty reduction. This could lead to a surge in imports and sales of foreign-made EVs.

4. Incentive for local production: While the policy initially benefits imports, it also aims to encourage local production. Companies importing EVs must commit to local production at specified ratios (1:2 in 2026, 1:3 in 2027). This requirement is designed to gradually shift the market towards domestically produced EVs.

5. Attraction of foreign investment: The policy may encourage more foreign EV manufacturers to set up production facilities in Thailand to take advantage of the incentives and meet local production requirements. Chinese EV makers like BYD, Great Wall Motor, and Chongqing Changan Automobile have already committed to investing in local production.

6. Market transition: The policy is likely to accelerate the transition from traditional internal combustion engine vehicles to EVs in Thailand. EV registrations have already seen a significant increase, with a 31% rise in the first five months of the year.

7. Potential oversupply concerns: As the market rapidly expands, there are concerns about potential oversupply. The Thai government has advised EV makers to look for export markets as domestic supply may exceed demand.

8. Support for Thailand's EV hub ambitions: The import duty reduction, along with other incentives, is part of Thailand's strategy to position itself as a regional EV manufacturing hub. This aligns with the country's goal of having EVs constitute 30% of total vehicle production by 2030.

The EV 3.5 policy represents Thailand's continued commitment to developing its EV industry while gradually reducing subsidies and increasing local production requirements. This approach aims to create a sustainable EV ecosystem and strengthen Thailand's position in the global EV market.