In return for incentives granted, EV makers are now required to build key components in Thailand by 2026

No free lunch. In return for the EV promotion measures granted by Thailand, vehicle manufacturers supported by the programme will have to invest in producing certain key EV components domestically by 2026, in line with the gearing up of local assembly of EVs in the country.

According to Ekniti Nitithanprapas, director-general of the country’s excise department, three crucial components of an EV must be assembled in Thailand by then, and they are the electric motor, the reducer, which functions similarly to a gearbox in combustion engine vehicles, and the inverter, which converts DC from the battery into AC to supply electricity to the motor.

This comes after the introduction of the first phase (3.0) and second phase (3.5) of EV promotion measures in the Kingdom, where establishing production bases and manufacturing EVs domestically is one of the conditions of these measures being provided, the Bangkok Post reports.

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.

The department said that this requirement compels car manufacturers to establish production bases in Thailand, leading to new investments and industries. So far, auto manufacturers participating in the programme have gradually established production bases in Thailand, with a total investment value of over 80 billion baht poured in so far.

Previously, the country’s board of investment (BoI) approved measures to promote investment in EV battery manufacturing, where module-level investments receive an eight-year corporate income tax exemption, and pack-level investments get a five-year exemption, although they are not subsidised by the EV promotion measures. However, cell-level investments enjoy an eight-year tax exemption and receive subsidies from the fund.

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