Thailand weighs higher EV import taxes to support local industry

Thailand's Cabinet has acknowledged a proposal to overhaul vehicle excise taxes, under which certain imported cars would face the highest proposed rates, while domestically manufactured vehicles could qualify for lower rates linked to investment and locally produced components.

The proposed restructuring aims to encourage vehicle manufacturers to establish or expand production facilities in Thailand, strengthen the domestic automotive supply chain and support the transition towards environmentally friendly vehicles.

According to a Government House report, the proposals follow a resolution adopted by the National Electric Vehicle Policy Committee, known as the EV Board, on 10 September 2026. The Excise Department has been tasked with reviewing the proposed tax structure before submitting detailed measures for Cabinet approval.

Rising EV imports put pressure on domestic production

Thailand has already introduced several measures to support electric vehicle (EV) manufacturing, adoption and component production, including the EV3 and EV3.5 incentive programmes.

Other measures provide reduced excise tax rates for domestically manufactured hybrid electric vehicles (HEVs) and mild-hybrid electric vehicles (MHEVs) with no more than 10 seats.

However, the rapid growth of the EV market has raised concerns about Thailand's dependence on imported vehicles.

According to the Federation of Thai Industries (FTI), battery electric vehicles (BEVs) accounted for 30.88% of domestic car sales between January and July 2026. Imported vehicles represented 63% of BEV sales, even after the import periods under the EV3 and EV3.5 programmes had ended.

The report noted that Thailand's EV manufacturing industry remains at an early stage, with domestic production costs exceeding those of imported vehicles. This cost disadvantage poses a risk to manufacturers operating in the country.

The Excise Department has therefore proposed a revised vehicle excise tax structure to encourage domestic production, attract longer-term investment and strengthen Thailand's automotive industry.

Three principles underpin the proposed tax reform

The proposed framework centres on three objectives designed to support the development of Thailand's automotive and component industries:

• Investment-driven imports: Allow selected advanced vehicle models to enter Thailand for research, evaluation and testing, providing opportunities to study new technologies, improve manufacturing capabilities and eventually establish domestic production.
   
• Regional and global automotive export hub: Expand manufacturing capacity and strengthen Thailand's position as a major production and export centre for EVs and other environmentally friendly vehicles.
   
• High-value local content: Encourage Thai manufacturers and suppliers to develop their capabilities, increase the use of locally sourced materials and produce more sophisticated automotive components. The policy also aims to promote employment among Thai workers and improve workforce skills to support next-generation automotive technologies.

Imported vehicles would face the highest tax rates

The proposed excise tax framework outlines three categories, with different rates based on import arrangements, domestic manufacturing activity and the use of locally produced components:

• Category 1 – Imported vehicles: Vehicles imported from overseas that cannot currently be produced in Thailand would face the highest excise tax rates, above existing levels. Although these imports may attract foreign investment, the policy aims to encourage manufacturers to establish production facilities and strengthen automotive supply chains in Thailand.
   
• Category 2 – Imports by domestic manufacturers: Automakers already operating factories in Thailand could import selected models to test market demand, subject to import limits. The number of vehicles permitted would be determined by the economic value generated by each manufacturer in Thailand during the preceding year, including spending on locally produced automotive components and employment. Excise tax rates would be lower than those in Category 1.
   
• Category 3 – Locally manufactured energy-efficient vehicles: Vehicles produced in Thailand with moderate local content, including low-volume premium models, would qualify for lower excise tax rates than either import category. This category would apply to vehicles whose manufacturers cannot yet use essential locally produced electronic components but have the potential to increase their use of Thai-made parts as domestic supply chains develop.