Warning over risk to Thai EVs when subsidies end

The Federation of Thai Industries (FTI) is concerned that the expiration of the government's electric vehicle (EV) incentive programme in 2027 could leave Thailand vulnerable to a surge of Chinese EV imports and weaken local automotive supply chains.

The scheme, known as EV3.5, runs from 2024 to 2027 and provides tax cuts and subsidies to automakers in exchange for investment in battery electric vehicle (BEV) assembly plants in Thailand.

Suwat Supakandechakul, newly appointed chairman of the FTI's Automotive Industry Club, said the government must prepare additional measures to sustain the sector once the programme ends.

Without incentives, automakers may choose to import BEVs rather than produce them locally.

"Chinese carmakers have already been importing vehicles from China and are expected to increase volume after 2027, as operating costs in Thailand may be higher than imports that benefit from the Asean-China Free Trade Agreement, which allows a 0% import duty," Mr Suwat said.

The club also highlighted the prolonged downturn in pickup sales, driven by tighter bank lending policies, high household debt, and shifting consumer preferences.

Once Thailand's product champion, pickup sales have fallen from 300,000-350,000 units annually to just 140,000-150,000 units, severely disrupting local parts suppliers.

Historically, pickups accounted for roughly 60% of Thailand's total vehicle production, with passenger cars at 40%. The balance has reversed, with passenger cars representing 60% of output today.

Much of this growth comes from Chinese automakers operating BEV factories in Thailand, while internal combustion engine pickups face disruption from the global transition to electric mobility.

Thailand's car manufacturing peaked at 2.45 million units in 2013, but stricter auto loan criteria and global economic pressures have reshaped the market.

The club projects production at 1.5 million units in 2026.

The FTI also urged the government to implement a car trade‑in programme to encourage EV adoption and support related industries such as electronics and auto parts.

However, a Finance Ministry official who requested anonymity said the project may be shelved due to unresolved issues, including how to determine the age of eligible vehicles, assess used car values, and manage disposal or export of old cars.