Thailand Sets 35% Tax on Imported EVs From 2027 to Push Local Production

Higher taxes put Thai factories at the centre of EV policy

Thailand will raise excise tax on certain fully imported electric vehicles to 35% from January 1, 2027, using a sharp tax increase to encourage carmakers to build factories, buy Thai components and employ local workers. The Cabinet approved the change on November 3, 2026, at a meeting in Udon Thani.

Imported battery electric vehicles (BEVs) currently taxed at 10% will face an increase of 25 percentage points. Imported range extended electric vehicles (REEVs), currently taxed at 15%, will face an increase of 20 percentage points. Qualifying electric vehicles manufactured in Thailand will retain a 2% excise rate, creating a substantial tax advantage for domestic production.

Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas said the policy targets imported vehicles outside government support arrangements, particularly businesses without Thai production or locally made components. The Cabinet also instructed the Excise Department to negotiate preferential rates for companies establishing or expanding manufacturing operations in Thailand.

The decision arrives during a rapid expansion in electric vehicle demand. Thailand imported $2.37 billion worth of EVs in the first nine months of 2026, with 96% coming from China. The government wants more of the spending behind that growth to reach factories and suppliers inside Thailand.

For buyers, the immediate issue is whether imported models become more expensive. For manufacturers, the larger decision is whether to keep supplying Thailand from abroad or invest in a local production base. Import quota allocations, eligibility procedures and concessions for companies preparing new factories have yet to be finalised.

Which vehicles face the increase?

BEVs run entirely on electricity stored in a battery. REEVs also use electric motors to drive their wheels, but carry a fuel engine that generates electricity to extend their driving range. Both categories are covered by the Cabinet's announced 35% rate for affected imports.

Excise tax is a tax charged on particular products. It is separate from customs duty, even though this measure focuses on vehicles brought into Thailand as finished cars. The change therefore concerns the excise treatment of imported vehicles, rather than a new blanket customs tariff on every EV.

Kasikorn Securities' market assessment listed a 15% rate for REEVs, while the Cabinet announcement described an increase from 15% to 35%. The announced policy puts both affected BEVs and REEVs at 35% from January 2027.

Ekniti and Excise Department Director General Pornchai Thiraveja described the policy as a way to reward investment in Thai manufacturing and components. Companies making that investment may negotiate different tax treatment, making the eventual eligibility rules central to their costs.

How the decision developed

Pornchai said the restructuring follows resolutions adopted by the National Electric Vehicle Policy Committee on November 25, 2025, and September 10, 2026. Those resolutions tasked the Excise Department with developing measures to encourage domestic vehicle production and assembly of important components.

The Electric Vehicle Association of Thailand (EVAT) says it and nine partner associations began pressing the government on the issue in March 2026. Their campaign sought greater protection for businesses producing vehicles and parts locally.

• November 25, 2025: The National Electric Vehicle Policy Committee adopted an earlier resolution underpinning the restructuring.
• March 2026: EVAT and nine partner associations began presenting their proposals to the government.
• September 10, 2026: The national committee adopted a further resolution guiding implementation.
• October 20, 2026: An industry representative warned that purchases brought forward before the tax increase could weaken demand in 2027.
• November 3, 2026: The Cabinet approved the tax increase in Udon Thani.
• January 1, 2027: The new rates are scheduled to take effect.

The government describes the increase as part of a sequence of four measures following the EV 3.0 and EV 3.5 support programmes. The remaining step is to establish domestic parts requirements. Finance Permanent Secretary Lawaron Sangsanit said Thailand already has eight EV factories and expects further investment and expansion.

Why suppliers and jobs matter to the government

The Federation of Thai Industries (FTI) puts the automotive sector at about 10% of Thailand's gross domestic product, a measure of the value produced by the economy. It says the industry supports more than 800,000 jobs across its supply chain and connects with more than 3,000 small and medium sized enterprises.

Thai suppliers face a practical challenge as vehicle technology changes. Businesses supplying conventional cars need opportunities to sell components used in electric models, while manufacturers need workers with skills suited to new production processes.

Pornchai outlined three goals: use vehicle imports to attract investment, make Thailand a regional and global EV production and export centre, and increase the use of valuable locally made parts. The government also wants existing businesses serving vehicles with internal combustion engines to participate in the transition.

Ekniti said the measure would be applied fairly to businesses producing vehicles or parts in Thailand and would be presented to Japanese investors during a planned investment promotion roadshow. The FTI plans investment roadshows and business matching with partners from Japan, Europe and the United States, including efforts to attract research facilities and advanced component production.

FTI chairwoman Pimjai Leeissarasakul described the scale of the industry and set out the federation's forecast for 2027:

Thailand's automotive industry accounts for 10% of GDP and supports over 800,000 jobs across the supply chain, including more than 3,000 SMEs," said Pimjai. "Once the new tax structure takes effect in 2027, automotive sector growth is projected at no less than 7%, with annual production reaching at least 1.55 million units, subject to remaining inventory imported prior to the deadline.

A fast growing EV market, with imports concentrated in China

Thailand's EV imports reached $421 million in September 2026, an increase of 138% from a year earlier. China accounted for almost 99% of those shipments, compared with 96% of the $2.37 billion imported during the first nine months of the year.

Department of Land Transport figures put EV registrations at 191,273 between January and September, up 83% from the same period in 2025. Electric passenger cars accounted for 167,789 registrations, or about 88% of the total.

FTI sales figures show how quickly demand is shifting within the wider vehicle market. September vehicle sales rose more than 14% to 55,255. BEV sales increased 90% to 22,587, while pickup sales fell more than 7% to 10,315. BEVs therefore represented about 41% of vehicles sold that month, calculated from the federation's figures.

Domestic vehicle sales during the first nine months rose to 521,225 from 447,969 a year earlier, an increase of about 16%. The recovery continued despite widespread flooding, including in parts of Bangkok.

The Board of Investment has reported cumulative approvals worth $4.59 billion across 189 EV projects. BEVs and hybrids together accounted for 55% of new car registrations in the figures cited alongside those investment approvals. Hybrids combine fuel and electric power, making that a broader category than vehicles powered only by batteries.

Buyers could face higher prices after a year end rush

A senior executive at an unnamed Chinese carmaker estimated that some imported EV prices could rise by up to 10%, potentially adding tens or hundreds of thousands of baht to individual models. A 10% increase on a vehicle priced at 1 million baht would add 100,000 baht.

Retail prices will depend on manufacturers' costs, competition and decisions about how much additional tax to absorb. A rise of 25 percentage points in the BEV excise rate and a 10% increase in a showroom price measure different things: the former changes a tax rate, while the latter describes the final amount a customer pays.

Suwat Supakarndechakul, an FTI vice president and chairman of its Automotive Industry Club, warned on October 20 that customers could bring forward purchases originally planned for 2027. Dealers may also accelerate imports and offer discounts to clear vehicles before January.

Surapong Paisitpatthanapong, adviser to the club's chairman and its spokesman, expected imports, registrations and sales to accelerate before the end of December. He identified the 2026 Motor Expo as an opportunity for stronger bookings. A buying rush followed by weaker demand remains an industry forecast.

Suwat also warned that deteriorating business conditions could prompt some brands to leave Thailand, creating difficulties with parts, servicing and warranty support. No manufacturer was identified as having announced a withdrawal because of the tax decision.

Carmakers weigh factories against higher import costs

Leapmotor plans to invest in a Thai factory and begin production in 2027, according to Liu Ning, general manager of Leapmotor Thailand. Liu said the company remained committed to its sales and investment plans:

"Whatever policies the government announces, they will not affect our sales or investment plans because we are genuinely committed to establishing and developing our business in Thailand," Liu said.

XPeng is studying Thai manufacturing after earlier investments in Indonesia and Malaysia. Its vice president, James Wu, described Thailand as an important market and said the company was working with MGC-ASIA:

"Thailand is a strategically important market for XPeng. We are working with MGC-ASIA to develop our business over the long term and have plans to establish a manufacturing facility, although we cannot yet provide details or a timetable," Wu said.

BYD already produces vehicles in Thailand. Pratarnwong Phornprapha, chief executive of its distributor Rêver Group, supported the tax structure and said discussions were taking place about producing additional models locally.

Pratarnwong framed the competition around investment rather than the nationality of the manufacturer:

"Previously, Thailand's automotive market might have been viewed as a contest between Chinese and Japanese manufacturers. That is no longer the case," Pratarnwong said.

Tesla, Volvo, Porsche and Audi were identified as brands without Thai vehicle production plans that may face the higher tax. Kasikorn Securities expects greater cost pressure on import businesses without a domestic manufacturing base. It identified AMATA, WHA, AH and SAT as potential beneficiaries of demand for industrial land and locally supplied vehicle parts.

EVAT wants investment to determine import privileges

EVAT president Suroj Saengsanit welcomed the tax increase as a first step toward protecting domestic automotive businesses. The association wants the government to connect lower tax import quotas to measurable investment rather than vehicle imports alone.

Its proposed assessment would cover local manufacturing, purchases of Thai parts for overseas factories, public charging infrastructure, research and development centres, and battery recycling facilities. A company could therefore contribute to the Thai economy through several activities, rather than only final vehicle assembly.

EVAT says the existing 40% local content threshold is adequate, but wants stricter verification and a larger contribution from Thai materials. Local content measures how much of a product's value comes from domestic activity or inputs. EVAT wants the calculation to reflect genuine Thai production more closely.

The association also proposes requiring manufacturers seeking excise reductions to buy certain common components locally. Chassis and body components are particular priorities because Thai suppliers can make them for both conventional and electric vehicles.

The Excise Department will develop domestic parts requirements over the next three years, giving manufacturers time to adjust. The choices made during that process will determine which suppliers gain orders as vehicle production shifts toward electric models.

Industry proposals reach beyond vehicle assembly

EVAT's wider package calls for closer Board of Investment oversight of labour and machinery commitments, with incentives withdrawn when recipients fail to meet conditions. It also proposes limiting new promotion in sectors already adequately served by domestic producers, except for qualifying joint ventures with at least 40% Thai ownership.

Other proposals address raw material costs, government negotiations over supply and prices, and controls on exports of valuable metal scrap. EVAT wants certificates of origin to be traceable to at least Tier 3 suppliers, meaning businesses several stages back in the production chain.

Technology transfer is another priority. The association proposes measurable targets and open software interfaces that would allow Thai developers to participate in vehicle technology. It also wants advanced driver assistance systems (ADAS), which support functions such as braking and lane assistance, tested and adjusted for Thai driving conditions using domestic laboratories.

The FTI's Reinvent Thailand strategy similarly seeks more valuable manufacturing, including advanced electronic parts and connected and automated vehicle systems. Its plans cover conventional pickups and several forms of electrified vehicles, reflecting the range of businesses already operating in Thailand.

These proposals extend beyond the Cabinet's approved tax increase. The immediate deadline is January 1, 2027, when the new rates begin. Manufacturers planning Thai production will be watching the Excise Department's negotiations over preferential treatment, while suppliers await the domestic parts rules that will shape future orders.

Key Points

• Thailand approved a 35% excise rate for affected imported BEVs and REEVs from January 1, 2027.
• The current rates are 10% for imported BEVs and 15% for imported REEVs. Qualifying locally manufactured EVs retain a 2% rate.
• Import quotas and preferential treatment for companies investing in Thai factories still require detailed rules.
• Thailand imported $2.37 billion worth of EVs in the first nine months of 2026, with 96% coming from China.
• Some imported models could become up to 10% more expensive, according to an unnamed carmaker executive's estimate.
• Leapmotor targets Thai production in 2027, XPeng is studying a factory, and BYD is discussing additional locally produced models.
• EVAT wants investment linked import privileges, stronger local content checks and more orders for Thai component suppliers.