BANGKOK, Thailand – Demand for electric vehicles is increasing in Thailand, with the energy crisis stemming from the war in the Middle East igniting further interest among consumers, though this rapid growth has revealed another challenge to the country’s ambition to retain its position as a regional automotive hub. Currently, over 60 per cent of all imported EVs are from China, a shift that has prompted calls for tax reforms and stronger local-content requirements to ensure the EV transition also strengthens Thailand’s domestic supply chain.

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Krisda Utamote, honorary advisor to the Electric Vehicle Association of Thailand, commented that putting only tax-based barriers on imported electric vehicles may not be a right solution for everything, adding that the country must ensure it not only enjoys the benefits of new technology from the influx of imported EVs but also builds the full car manufacturing chain in Thailand to absorb growing local demand. The Thai government has ambitious growth plans for emerging industries including EVs and hopes to become a regional EV hub while evolving into a low-carbon society.

The national EV board has a policy known as EV 3.5 to support investment in electric vehicle manufacturing and provide subsidies for the purchase of electric cars, pickup trucks and motorcycles. The transition has been split into three phases, with the first between 2021 and 2022 creating domestic demand starting with electric motorcycles and developing EV infrastructure, the second from 2023 to 2025 focused on establishing EV and battery production to meet domestic demand, and the third and current phase from 2026 to 2030 aiming to increase EV production to 30 per cent by 2030 with a longer-term target of 50 per cent by 2035.

Investment in Thailand’s EV supply chain is also growing, with the Board of Investment reporting over 137 billion baht spanning 198 projects covering the entire EV ecosystem, from vehicle production and battery development to critical components and charging infrastructure. Earlier this year at the Bangkok International Motor Show 2026, a record-breaking 130,000 cars were booked, 65 per cent of which were Chinese EVs, while at least 11,165 cars were booked at the mid-year Big Motor Sale 2026, an increase from 6,500 the year before. Juthamas Khanmanee, co-chair of Big Motor Sale 2026, told Thai PBS World that EV sales in Thailand will increase significantly compared to 2025 because many brands are entering the market and people are more open-minded to using EVs.

While demand is increasing, structural issues still need to be addressed. For decades Thailand has been known as the Detroit of Asia, one of Southeast Asia’s largest automotive production bases, but the industry has traditionally been built around internal combustion engines, and the transition to EVs is now changing the structure of the entire industry. According to the Electric Vehicle Association of Thailand, about 140,000 electric vehicles were registered during the first seven months of 2026, with Thailand importing over 60 per cent of EVs from China worth about 1.68 billion US dollars during that period. Under the ASEAN-China free trade agreement, fully built EVs imported from China are subject to zero import duty, while locally produced EVs are subject to a 2 per cent rate compared with 10 per cent for imported EVs, a difference industry leaders say is not enough to encourage carmakers to invest in EV manufacturing in Thailand.

EVAT President Suroj Sangsnit explained that revising the duty on imported EVs is intended to strengthen the country’s domestic supply chain, adding that major automakers that have operated factories in Thailand for decades are now starting to import EVs from China. He warned that if this trend continues and the government does not revise the excise tax structure, Thailand could eventually become entirely dependent on vehicle imports from China, meaning the dream of remaining the Detroit of Asia could disappear altogether. Thailand is not the only country competing, with Vietnam having strong government support for domestic EV production and Indonesia using incentives to attract investment in EVs, batteries and related supply chains. The challenge for Thailand is not only about attracting investment but also levelling up its value chain, particularly the development of related technologies, with Krisda noting that research and development, design, testing and facilities have much higher value than manufacturing alone.

The Kasikorn Research Centre predicts that Thailand’s automotive production will reach 675,000 cars in 2026, an 8.7 per cent increase from last year, with growth of electric vehicle production expected at about 210,000 units and the market share of EVs expected to expand to about 60 per cent compared to traditional internal combustion engines. Battery electric vehicles are expected to see their market share rise from 20 per cent in 2025 to 31 per cent this year, hybrid electric vehicles to 27 per cent, while plug-in electric vehicles remain at 3 per cent, with internal combustion engines continuing to decline from 78 per cent in 2023 to 39 per cent this year. Although the market share of EVs is increasing, most are still imported, mostly from China, with the centre estimating that the market share of Chinese EVs will jump from 13 per cent in 2024 to 32 per cent of all electric vehicles registered in Thailand in 2026.

Kevalin Wangpichayasuk, deputy managing director of K-Research Centre, pointed to several factors driving this growth including volatile fuel prices and government incentives under EV 3.5 which have intensified competition between EV brands, noting that more brands entering the market and price reductions have led to double-digit sales of EVs in recent months. In order to strengthen its own EV supply chain, Kevalin suggested the government should level the playing field by reviewing tax measures and ensuring the use of locally produced car parts and components, adding that the key is to focus on encouraging more production in Thailand, particularly by increasing the use of local content and locally sourced components.

The National EV Board has already announced that it will propose a new three-tier tax structure for EVs, aiming to secure Cabinet approval by the end of September 2026, with the lowest tax rate applying to those manufacturing vehicles in Thailand with high local content, the second tier applying to companies that currently import vehicles but plan to establish manufacturing bases in Thailand, and the highest tax rate applying to those importing vehicles only. The Federation of Thai Industries voiced strong support for the proposed overhaul to boost local EV supply chains. Regardless, advancing Thailand’s EV industry goes beyond incentives, with industry leaders hoping to see a broader strategy from strengthening local supply chains and encouraging joint ventures to research and development capabilities.

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Suroj suggested the government roll out policies that strengthen local supply chains and component manufacture while encouraging joint ventures in EV production, and hoped to see more EV transition in public transportation such as taxis, public buses and motorcycles, as well as EV charger infrastructure to keep up with the increasing number of EVs on Thai roads, concluding that if Thai companies can partner with foreign carmakers, they can acquire technology, build on it and eventually develop their own products as China has done.

-Thailand News (TN)