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Financial Subsidies for Electric Vehicles Manufactured in Thailand

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Financial Subsidies for Electric Vehicles Manufactured in Thailand

In an attempt to promote the development and use of electric vehicles (“e-vehicles”) in Thailand, the government has initiated multiple incentives to support the industry, including but not limited to: exemption-reduction of import duties; reduction of consumption tax; and financial subsidies. In such regard, on 23 August 2022, the cabinet approved THB 2.923 billion as a financial subsidy to support and promote e-vehicles in Thailand, as follows:

  • Passenger car which is a Battery Electric Vehicle (BEV) with its retail price not exceeding THB 2 million:
    ・Financial subsidy of THB 70,000 for a BEV with the battery capacity of over 10 kwh but less than 30 kwh; and
    ・Financial subsidy of THB 150,000 for a BEV with the battery capacity of 30 kwh and over.
  • BEV pick-up truck with its retail price not exceeding THB 2 million and carry load not exceeding 4,000 kgs; and
    ・Financial subsidy of THB 150,000 for a BEV with the battery capacity of 30 kwh and over.
  • Motorcycle with its retail price not exceeding THB 150,000 and comprising the following components: Li-on battery of 48 volts and over; battery capacity of 3 kwh and over or driving range of  75 km and over per charge; tyre which have either TISI standard no. 2720-2560 or technical specification of the UN Regulation No. 75 00 series, or a higher standard, and have passed the TISI safety standard or received certification under the UN Regulation No. 136 or higher standard.
    ・Financial subsidy of THB 18,000.

Please note that the vehicles listed above must either be manufactured within 2022-2025 (must be registered by 31 December 2025) or imported as Completely Built-Up (CBU) within 2022-2023 (must be registered by 31 December 2023) in order to be eligible for the scheme.

These financial subsidies were originally introduced under the Announcement of the Excise Department Re: Criteria, Procedures and Conditions for the Eligibility of Measures to Support the Use of Electric Vehicles such as Cars and Motorcycles dated 21 March 2022 (“Announcement”). The Announcement is an incentive scheme granted by the government in order to promote the use of e-vehicles and support the expansion of the industry within Thailand, and is effective until 31 December 2025. However, there are conditions which will still apply post 2025.

Under the Announcement, the following are eligible for the financial subsidy scheme:
 

  • Industrial Operator (registered);
  • Industrial Operator with a factory located in the freezone;
  • Industrial Operator with a factory located in the IEAT Free Zone;
  • Importer who is also an industrial operator under 1-3 above;
  • Importer who is appointed as the authorized distributor by the industrial operator with a factory located in the freezone;
  • Importer who is appointed as the authorized distributor by the product owner, and has a manufacturing agreement with the industrial operator with a factory located in the freezone; and
  • Importer that has a manufacturing agreement with a BOI promoted company for the manufacturing of BEVs.
     

In order to enjoy the financial subsidy, the foregoing eligible persons are subject to the following conditions, among others: to submit the application and supporting documents to the local Excise office; sign a memorandum with the Excise Department; and place a bank guarantee of up to THB20 million depending on the type of e-vehicles. Please note that the bank guarantee will remain as a security to the incentive scheme until 30 June 2026. While the rate of the bank guarantee amount is fixed, the Excise Department may conduct an annual assessment and increase the guarantee amount depending on the sales amount, price, supply and demand in Thailand.

Additionally, if there is any importation of CBU e-vehicles within 2022-2023, the eligible person must manufacture or cause an industrial operator or relevant parties to manufacture cars to compensate those CBU imported e-vehicles at the ratio of 1:1 (manufacture one car per one CBU import) by 31 December 2024. This period may be extended to 31 December 2025, provided that the compensation ratio is 1:1.5 (manufacture 1.5 car per one CBU import).

Although the incentive scheme will end on 31 December 2025, nevertheless the eligible person and/or industrial operator must comply with the following requirements and use a local battery or parts for the manufacturing of BEVs, in one of the following methods, commencing as of 1 January 2026:

  • Use a locally manufactured battery cell;
  • Use a locally manufactured battery module and as of 1 January 2030 use locally manufactured PCU inverter, as well as use one of the five following components: traction motor, reduction gear, air compressor unit for BEV, battery management system (BMS) and Automotive Domain Control Unit (DCU) as of 1 January 2035; or
  • Use a locally manufactured battery pack assembly and as of 1 January 2030 use locally manufactured PCU inverter, as well as use two of the following five components: traction motor, reduction gear, air compressor unit for BEV, BMS and DCU as of 1 January 2035.
     

If the eligible person enjoys the benefits of the scheme but is unable to fulfill its requirements, the following penalties may apply:
 

  • Recall of the granted financial subsidy, with an interest rate of seven point five percent, and enforcement of the bank guarantee placed in the event that the eligible person and/or relevant parties fail to manufacture enough BEVs to compensate the imported CBU BEVs;
  • A fine of twice the amount of excise tax (consumption tax), penalty and surcharge under the excise tax law, calculated per each vehicle that cannot be manufactured to compensate the imported CBU BEVs (for this clause, the eligible person and relevant industrial operator are jointly liable); and/or
  • A fine of twice the amount of excise tax (consumption tax) payable for the manufacturing of each BEV that does not comply with the said local parts (battery and parts) usage requirements (for this clause, the eligible person and relevant industrial operator are jointly liable).

This is intended merely to provide a regulatory overview and not to be comprehensive, nor to provide legal advice. Should you have any questions on this or on other areas of law, please do not hesitate to contact:

Nuttaros Tangprasitti
Partner

Sattapat Suradecha
Attorney-at-law