EV firms told to make car parts in Thailand by 2026

Car manufacturers supported by the government’s electric vehicle (EV) promotion measures must invest in producing key EV components domestically by 2026, according to the chief of the Excise Department.
Ekniti Nitithanprapas, director-general of the Excise Department, said the three crucial components of an EV that must be assembled in Thailand are: the electric motor, which converts electrical energy into kinetic energy to power the vehicle; the reducer, which functions similarly to a gearbox in combustion engine vehicles; and the inverter, which converts direct current (DC) from the battery into alternating current (AC) to supply electricity to the motor.
According to Mr Ekniti, after the government, via the Excise Department, introduced the first phase (3.0) and second phase (3.5) of EV promotion measures, auto manufacturers participating in the programme have gradually established production bases in Thailand, with a total investment value of over 80 billion baht.
Establishing production bases and manufacturing EVs domestically is one of the conditions of these measures.
Under these EV support measures, participating companies are required to locally manufacture EVs to compensate for imports, equivalent to 100% of sales, in the first year. If the company fails to meet the local manufacturing requirement in the second year, it must produce 1.5 times the sales volume.
This requirement compels car manufacturers to establish production bases in Thailand, leading to new investments and industries in line with the department’s policy of promoting economic growth alongside environmental protection.
Mr Ekniti also noted that the department’s vehicle tax revenue, which decreased by around 30% in the first 11 months of fiscal 2024, was mainly due to a decline in production and sales as well as excise tax reduction measures for EVs. Vehicle tax collection is one of the department’s highest revenue-generating categories.
Previously, the Board of Investment approved measures to promote investment in EV battery manufacturing. Module-level investments receive an eight-year corporate income tax exemption, and pack-level investments get a five-year exemption. However, these levels are not subsidised by the EV promotion fund, while cell-level investments enjoy an eight-year tax exemption and receive subsidies from the fund.