Thai Automotive Groups Urge Bangkok to Protect Local EV Players

Two leading automotive groups in Thailand have urged Bangkok to prioritise and protect local players in the electric vehicle ecosystem amid an influx of cheap EV imports, particularly from China.

The Automotive Industry Club of the Federation of Thai Industries (FTI) suggested giving tax cuts for using local components, while the Thai Automotive Industry Association (TAIA) called for higher excises on imported EVs to protect local manufacturers.

Calls for Tax Reform and Local Content Rules

TAIA president Yuphin Boonsirichan called for Bangkok to restructure the duties imposed on fully imported EVs to safeguard local manufacturers and component suppliers. She urged the Thai government to launch campaigns promoting the purchase of EVs assembled domestically, even through tax incentives, and suggested that government agencies procure locally assembled EVs to stimulate the sector's growth.

Suwat Supakandechakul, chairman of the Automotive Industry Club, said basic components like car seats, wiring and windscreens should be locally sourced to ensure quality and reduce production costs. High-value parts already manufactured in Thailand, such as vehicle chassis, should also be prioritised.

"The government should promote the use of these parts, with expenses made tax-deductible," he said, adding that this was necessary to protect Thailand's position as a regional automotive hub.

The Crisis Facing Thailand's Auto Industry

The urgency of these calls reflects a deepening crisis in Thailand's automotive sector. A coalition of ten automotive associations, representing more than 1,500 operators, has warned that the country's shift towards electric vehicles, combined with the cost advantage of imported Chinese EVs, could severely weaken local production and threaten the survival of Thai auto-parts manufacturers.

Producing vehicles in Thailand costs approximately 30% to 40% more than importing similar cars from China, putting local manufacturers and parts suppliers at a significant disadvantage. The industry groups have proposed raising the excise tax on fully imported CBU EVs to at least 32%, creating a 30-percentage-point gap with domestically produced EVs, which are currently subject to a 2% excise tax.

The coalition has also proposed an import quota system linked directly to local production, where companies that invest in vehicle production in Thailand would be allowed to import CBU EVs at the existing lower excise tax rate of 10%, capped at no more than 10% of each company's production volume.

Local Content Concerns

The automotive groups are also seeking tougher local content requirements, with locally sourced parts to account for at least 80% of a vehicle's value, along with a revised calculation method to close loopholes. The current system, they argue, should be tightened to prevent profits or labour costs from being counted in ways that weaken the intended support for Thai parts manufacturers.

This concern is particularly acute given that only 26% of EVs sold in Thailand during the first five months of 2026 were locally produced, according to FTI figures, which reported 82,143 EV sales with just 21,396 units coming from domestic manufacturing.

Malaysia's Parallel Moves

The calls from Thai automotive groups follow similar moves in the region. Malaysia recently imposed two new conditions for the import of completely built-up EVs following the end of a four-year special exemption on December 31, 2025.

Since July 1, all imported CBU EVs are subject to a minimum cost, insurance and freight value of RM200,000 and a minimum motor power threshold of 180kW. The investment, trade and industry ministry continues to provide a 100% exemption from import duty, excise duty, and sales tax for locally assembled completely knocked-down EVs until December 31, 2027.

The Thai government faces a delicate balancing act between promoting EV adoption and protecting domestic manufacturing. The FTI has indicated it is holding discussions with a Thai parliamentary committee on tariff measures while pushing for tougher rules on EV production to protect the local industry.

As Suwat noted, the strategy aims not only to maintain Thailand's status as Southeast Asia's automotive hub but also to address another pressing issue: the United States' concern over transshipment of products assembled in Thailand with imported components. Washington could use this practice as grounds to impose higher tariffs on products from Thailand.

With the current EV3.5 support scheme expected to conclude by 2027, industry groups are urging swift action to prevent what they describe as a potential "production cliff" that could see automakers abandon local manufacturing in favour of tariff-free imports.