Thailand's Three-Tier EV Tax Aims at Imports — But Local Assembly May Blunt It

Thailand is preparing to redraw the cost equation for electric vehicles sold in the country — and for manufacturing professionals watching how policy shapes production footprints, the details matter.

Thailand's national electric vehicle (EV) policy board has agreed in principle to introduce a three-tier excise tax structure favouring domestically-manufactured EVs over imported one, a finance ministry official said.

Under the planned structure, fully-imported vehicles will face the highest rate, sitting above the current 10% baseline, while locally-made EVs will carry the lowest. The timing is notable: electrified vehicles accounted for 55% of new car registrations in Thailand in the first seven months of 2026, outpacing internal combustion engine models for the first time.

How the Grace Period Built an 89% Share

The policy targets a structural advantage that Chinese automakers converted into near-total market dominance.

Thailand's 2003 free trade agreement with China means that China-made EVs currently enter tariff-free.

Layered on top of that, Thailand's own incentive programme delayed its localisation teeth.

Thailand's own EV 3.0 incentive scheme, launched in 2022, paired tax cuts and cash subsidies with local-content offset requirements, but deferred those offset obligations until 2024.

The result: Chinese automakers held 89% of Thailand's EV market by the end of 2025. According to Thai research institute Krungsi, Chinese brands cut prices by a further 13.1% by early 2025, before moderating to 2.7% later that year. Rhodium Group has documented price gaps of up to 50% between Chinese and non-Chinese EV models.

Chinese EV sales in Thailand peaked in December 2025 as incentives approached their January expiry.

Sales then cratered before recovering to near-2025 levels within months — without any meaningful shift in overall market share.

The Fiscal Backdrop

Thailand's own fiscal position adds urgency to the timing.

The country's budget deficit exceeded 3% of GDP in 2025 and is approaching 3.5% in 2026 as it nears a self-imposed 70% debt ceiling. The government has sought approval to borrow THB 400bn (US$12.2bn). Against that, the EV programme is small:

The EV scheme is fiscally modest, having subsidised roughly 175,000 EVs and 35,000 e-motorcycles for about THB12bn over its first three years.

That works out to less than 0.5% of Thailand's annual budget.

Localisation Is Already Under Way

Here is the complication for anyone assuming the tax is protectionist in effect.

Eight of them—BYD, Great Wall, Changan, SAIC, Chery, Hozon, GAC and Wuling—have announced Thai assembly plants thus far.

Most are operational as of Q2 2026, making Thailand the third-largest global destination for Chinese EV manufacturing investment by value, behind Hungary and Brazil — and the largest by number of plants. Localisation has so far concentrated in lower-value assembly work, with most parts still originating in China, but that is beginning to change:

The first full battery cell manufacturing plant, a roughly US$1bn investment by China's Sunwoda with annual capacity for around 300,000 EVs, was announced in 2025.

Thailand also faces competition for this investment, with Indonesia and Vietnam separately offering incentives to attract Chinese automotive manufacturing.

The Open Question

With eight Chinese automakers already operating Thai assembly plants, many exporters may simply qualify for the new structure's lower tiers despite its ostensibly protectionist intent. Whether the policy actually moves the 89% market share depends on rates the government has not yet set — and a grace period whose length remains undetermined.