Thailand Plans US$714 Million EV Scheme to Replace 80,000 Ageing Vehicles

Thailand is reviewing a 24 billion baht (US$714 million) electric vehicle support programme aimed at replacing up to 80,000 ageing transport vehicles as the country accelerates its energy transition efforts and seeks to revive its automotive sector.

The proposed plan would initially focus on commercial transport vehicles including taxis, motorcycle taxis, tuk-tuks, buses and trucks, with the government now considering whether to expand assistance to cover other vehicle categories.

Deputy Transport Minister Siripong Angkasakulkiat said the proposal was submitted to a government committee in June and could include subsidies, low-interest financing and tax incentives for eligible vehicle replacements.

"We are reconsidering whether the assistance should be extended to all vehicle categories, not just those for transportation," Siripong said.

Industry Pressures and Response

The initiative comes as Thailand's automotive industry faces pressure from weaker domestic demand. Vehicle sales fell to a 15-year low in 2024 as high household debt and stricter lending conditions affected purchases, particularly in the pickup truck segment.

Thailand remains Southeast Asia's largest automotive production hub, but industry groups have urged the government to ensure future EV incentives support local manufacturing. The Federation of Thai Industries' Automotive Industry Club said new measures should prioritise locally produced EVs using a higher share of domestic components to strengthen supply chains and create jobs.

"More domestic EV production means more jobs, higher incomes and greater tax revenue, and is a win-win for businesses, consumers and the government," said Surapong Paisitpattanapong, spokesperson of the group.

A Hub for EV Investment

Thailand has attracted more than US$4 billion in EV-related investments, including from Chinese manufacturers such as BYD and Great Wall Motor, through previous tax incentives and support programmes. The kingdom is positioning itself as a regional EV manufacturing hub, with several automakers establishing or expanding production facilities.

The government is also considering financing assistance for taxi drivers replacing vehicles that reach the 10-year age limit next year. The scheme could reduce daily loan repayments for EV purchases to 500 baht from around 700 baht over five years, providing immediate relief to drivers while accelerating the transition to cleaner vehicles.

Finance Minister Ekniti Nitithanprapas said the programme could also support EV purchases, pickup truck replacements and vehicles capable of using B20 biodiesel through low-interest loans and subsidies.

Implementation Timeline

The government expects discussions on the programme's final structure to continue for another month, with implementation targeted for this year. The scheme represents a significant commitment to Thailand's energy transition goals while addressing the near-term challenges facing the automotive sector.

A recent statement from the government indicated that Thailand is planning to replace some ageing vehicles with electric vehicles as part of its broader energy-transition efforts. The country's automotive industry, which serves as an export base for major global carmakers including Toyota, Honda and China's BYD, has been navigating a difficult period marked by falling production and exports.

Broader Context

The proposed EV scheme comes as Thailand's car production fell 7.55% in June, with the Federation of Thai Industries cutting its full-year production forecast to a 3.33% drop from an earlier projection of 3% growth. The revised outlook reflects declining exports amid global economic uncertainty and geopolitical tensions.

In the first six months of 2026, domestic EV sales reached over 104,000 units and remain on track to hit 200,000 units by the end of the year. The rapid growth in EV adoption, supported by government policies and incentives, has been one of the few bright spots in Thailand's automotive landscape.

Meanwhile, Japan's Mitsubishi Motors recently announced plans to invest 16 billion baht by 2030 in Thailand to support the energy transition of the automotive industry, with a focus on electric vehicle technology. The company is studying the production and export of pickup trucks and an electric version of its Pajero sports utility vehicle, with Thailand as a production base.

Outlook

For Thailand, the EV replacement scheme represents a balancing act: supporting the transition to cleaner vehicles while ensuring that domestic manufacturing benefits from the shift. As the global automotive industry undergoes its most significant transformation in decades, Thailand's ability to attract EV investment while supporting its traditional automotive manufacturing base will be critical to its long-term competitiveness.

The 24 billion baht programme, if implemented as planned, could provide a significant boost to both Thailand's energy transition goals and its struggling automotive sector. With implementation targeted for this year, the coming months will be crucial in determining the final structure and scope of the initiative.