BANGKOK (Reuters) - Thailand will extend a production timeframe for battery electric vehicles (BEV) and offer incentives for hybrid EVs to support the industry in Southeast Asia's automobile hub, its Board of Investment said on Wednesday.
The measures are the latest to support a struggling auto sector that faces a grim future due to a stagnant domestic market at a time of tepid economic growth and tight credit conditions.
The current EV incentive package requires local production this year of one vehicle for each vehicle that was imported earlier. The ratio will rise in 2025 to 1.5 vehicles for each vehicle imported.
Southeast Asia's second-largest economy is the region's auto assembly and export hub and home to Japanese manufactures like Toyota (NYSE:TM) and Honda (NYSE:HMC).
In recent years, it has seen a wave of Chinese EV investments valued over $1.44 billion from BYD (SZ:002594), Great Wall Motors and Chagan.
So far 84,000 BEVs have been imported under the EV 3.0 package, Narit Therdsteerasukdi, secretary-general of the BOI, told a press conference.
The portion of the manufacturers' production commitment not completed under the first package will be transferred to the conditions of the next incentive package, the BOI said.
The purpose of that was to "avoid oversupply that could lead to a more severe price war," Narit said after a meeting of the government's National Electric Vehicle Policy Committee.
The EV 3.5 incentive package, which took effect in 2024, requires the production in 2026 of two vehicles for each vehicle imported under the scheme. The ratio will rise in 2027 to three vehicles for each vehicle imported.
Reuters first reported that EV makers in Thailand were planning to re-negotiate incentive terms due to the sharp sales contractions.
The meeting on Wednesday also approved a reduced excise tax rate for certain locally produced hybrid EVs (HEV) and mild hybrid EVs (MHEV), the BOI said.
Thai domestic auto sales and production has slumped with October production dropping 25% annually for the 15th straight month. Local sales fell 36% that month.