EV tax hike set to spur buying spree

Imports face higher levy from Jan 1

The government's plan to raise excise taxes on imported electric vehicles (EVs) from Jan 1 next year is expected to trigger a year-end buying spree, as consumers rush to beat the higher levies, says the Federation of Thai Industries (FTI).

The cabinet approved higher excise taxes for imported battery EVs and range-extended EVs on Tuesday, raising the rates to 35% from 10% and 15%, respectively.

The measure aims to protect automakers operating manufacturing facilities in Thailand and encourage new investment in domestic EV production.

Authorities believe the tax hike will help establish fairer competition between local manufacturers and EV importers, particularly those benefiting from zero import tariffs under the Asean-China Free Trade Area.

According to Suwat Supakandechakul, chairman of the Automotive Industry Club under the FTI, the period before the new rates come into force is likely to see a significant jump in EV demand, imports and vehicle bookings.

"The market is expected to experience a rush of purchases as consumers hurry to take advantage of the current tax rates before they expire," he said.

This active market should be evident during the 12-day Thailand International Motor Expo, which opens on Dec 2, said Mr Suwat.

"We would like to thank the government for understanding and acting upon the proposals made by automotive manufacturers, particularly legacy internal combustion engine producers that have invested in Thailand for many years," he said.

Despite supporting the measure, the FTI is urging authorities to introduce safeguards to address potential market distortions.

Concerns include a surge in imports before year-end that could dampen demand in 2027, as well as uncertainty over whether vehicles ordered this year but delivered after Jan 1 will be exempt from the higher tax rates.

The EV tax hike may also create headwinds for Thailand's pickup market, said Mr Suwat.

Prospective buyers could postpone pickup purchases and switch to EVs while current tax rates remain in place, making it more difficult to revive sluggish pickup sales in the closing months of the year.

Sales of conventionally powered pickups continue to weaken. Between January and September, sales fell 16% year-on-year to 47,552 units, according to the club.

The Excise Department is preparing a pickup trade-in programme offering a subsidy of 40,000 baht per vehicle, with a target of attracting 150,000 participants.

However, Mr Suwat questioned whether the incentive would be sufficient, urging the government and pickup manufacturers to complement the scheme with more flexible financing options to improve access to auto loans and stimulate demand.