Some Chinese EV brands back 35% Thai excise tax from 2027

Several Chinese carmakers, particularly those already assembling vehicles in Thailand, support higher excise tax on imported electric vehicles, an automotive industry source told Bangkok Biznews, highlighting differing interests within China’s expanding presence in the Thai market.

The support extends beyond Japanese manufacturers as Thailand prepares to introduce a 35% excise rate on affected imports from January 1, 2027. Other Chinese brands are examining local assembly options to sustain their businesses under the revised structure.

The Cabinet approved the changes at its off-site meeting in Udon Thani on November 3, 2026. Excise tax on imported battery electric vehicles (BEVs) will rise from 10% to 35%, while the rate for imported range-extended electric vehicles (REEVs) will increase from 15% to 35%. The January start is intended to give businesses and dealers time to adjust.

Higher import tax exposes different interests

The industry source said Japanese brands had visibly pushed for changes, but several Chinese manufacturers also wanted higher tax, especially those that had already established assembly operations in Thailand. 

Criticism of the increase has centred on whether the government is changing the terms under which Chinese brands entered the market. Opponents argue that importers have complied with existing rules, paying 10% excise rather than the 2% rate available for qualifying locally assembled vehicles.

The argument for importing rests partly on production costs in China being at least 30% lower than in Thailand, according to the report. Importers have therefore accepted higher excise because the overall economics remained favourable.

Critics also question another change so soon after Thailand’s vehicle excise structure was revised on January 1, 2026. Some have attributed the latest move to pressure from Japanese manufacturers affected by growing competition from Chinese EVs.

The proposed increase had been discussed for some time and was initially expected to be finalised in September. Bangkok Biznews reported that flooding was believed to have delayed the decision.

Sunhavut Thamchuanviriya, group chief executive and director of Millennium Group Corporation (Asia) Public Company Limited, or MGC-ASIA, said the substantial increase should not surprise businesses. Reports had circulated repeatedly, including estimates close to the eventual 35% rate.

Sunhavut expected companies already planning local assembly from completely knocked-down kits, known as CKD assembly, to accelerate their projects once official details became available. Businesses without such plans would face a difficult task if they continued competing in Thailand’s crowded market, he said.

Local parts and investment determine tax incentives

The government intends to use preferential excise rates to attract manufacturing investment and protect Thailand’s existing automotive supply chain, according to Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas.

Ekniti said Thailand needed to remain a production and export base while safeguarding companies that employed substantial numbers of Thai workers.

“They manufacture locally, but have not received sufficient support as the world has changed rapidly and imports have created unfair competition. We therefore need to preserve the domestic production base and encourage new investment,” Ekniti said.

The Cabinet has tasked the Excise Department with discussing new investment under the revised tax structure, with special rates available to investors. Ekniti said several businesses had already approached the department about investing in Thailand or expanding production to qualify for incentives.

The government plans to explain the measures during a roadshow with the Board of Investment in Japan on November 17, 2026. Ekniti said the policy was intended to ensure fair treatment for all manufacturers producing vehicles or components in Thailand, rather than favour Japanese investors alone.

Industry Minister Varawut Silpa-archa said his ministry had advised the Cabinet that excise tax could offset import-duty concessions and prevent manufacturers with Thai production bases from being disadvantaged against businesses selling fully imported vehicles.

Varawut said the government remained committed to established manufacturers and suppliers, particularly Japanese companies that had helped develop Thailand’s economy over several decades. Supporting the technological transition should also involve helping those businesses adapt, he said.

Varawut warned that internal combustion engine vehicles contained about 20,000–30,000 parts each, compared with only thousands in an EV. Relying on imported vehicles or importing all their components could undermine the supply chain and threaten the survival of Thai small and medium-sized suppliers.

The revised approach links tax treatment to domestic content, with greater use of locally produced components allowing lower rates, Varawut said. He cited Mitsubishi pickups with local content above 60%, with some models reaching 70–80%.

Varawut said the government would continue consultations with carmakers to address problems arising from the transition.

Dongfeng, Leapmotor and XPeng study Thai assembly

Several Chinese brands have outlined plans or studies for Thai assembly, although the investment structures, partners and production arrangements have yet to be settled.

Anuwat Inthraphuvasak, chief executive of AI Mobility Co Ltd, the Thai distributor of Voyah, said his company and Voyah’s parent, Dongfeng Motor, agreed that a production line would need to be established in Thailand.

AI Mobility held the discussions ahead of Voyah’s planned Thai market entry and first-model launch in late November. Anuwat said the partners were awaiting clearer government details before finalising their approach.

The possible investment could involve three parties: AI Mobility, Voyah and another partner. Anuwat said the options included investing jointly in their own operation or using a contract assembler, with a conclusion to follow once the measures were clear.

Leapmotor is also studying local assembly as part of a long-term commitment to Thailand, according to Liam Liu, general manager of Leapmotor (Thailand) Co Ltd.

Liu described Thailand as a strategically important market with considerable potential, rather than simply an opportunity to sell imported vehicles during an EV boom.

“We are not looking at doing business for three or five years. We are looking at long-term investment and staying in Thailand for 10, 15 or even 60 years. We want to achieve what Toyota has done,” Liu said.

Leapmotor has been examining a Thai CKD operation and plans to send a team from China for further study in November. Liu said the company had identified four assembly options and envisaged initial production capacity of 60,000–80,000 vehicles a year.

James Wu, vice-president of XPeng, said the company had been aware of the proposed tax restructuring for some time and was not surprised by the development.

Wu supported using tax measures as one way to protect Thailand’s component industry by encouraging more investment in local vehicle assembly. XPeng has continued studying a Thai CKD operation.

“We are ready to adapt to the rules. If we open a factory in Thailand, we will also need to consider the wider opportunities across the region, including ASEAN,” Wu said.

Import stockpiling could spur year-end sales

The higher excise rates are expected to push up vehicle prices unless brands absorb the additional cost, while efforts to bring in stock before the change could stimulate sales towards the end of the year.

An industry source said some brands were importing as many additional vehicles as possible while the existing rates remained in force. The stockbuilding could add momentum to an EV market already recording strong growth.

Figures from the Automotive Industry Club of the Federation of Thai Industries show that, during January–September 2026:

- Total vehicle sales reached 521,226 units, up 16.35% from the same period a year earlier.
- Electric passenger-car sales totalled 161,532 units, accounting for 30.99% of overall vehicle sales.
- Electric passenger-car sales increased by 98.56% year on year.

Buying activity is expected to be particularly strong towards year-end, including at the Thailand International Motor Expo.

The expiry of the EV 3.0 incentive programme helped drive bookings at last year’s event to a record of more than 70,000 vehicles, providing a precedent for another rush ahead of a policy change. 

Source: Bangkokbiznews