CREATING ASEAN’S FULLY CHARGED EV HUB

Thailand is committed to playing a leading role in the global electric transportation revolution and fulfilling its international commitment to greenhouse gas reduction. Indeed, the use of Electric Vehicles (EVs) has quickly become a practicality in Thailand where multiple models of EVs from global and local manufacturers have generated great enthusiasm among local car users, attracted by their environment- friendly advantages, reasonable prices and increased confidence in its long-term uses.

While Hybrid Electric Vehicles (HEVs) have already become popular with Thailand’s car users, the country is forecast to see an increase in the number of more intensive battery-fuelled vehicle types of Plug-in Hybrid Vehicles (PHEVs) and Battery Electric Vehicles (BEVs) on the road over the next few years. As more of these EVs are being sold, their prices are also falling due to better economies of scale, making them an even more appealing alternative to cars with traditional combustion engines. Catering to the vibrant consumer market, this trend also reflects the concrete national framework of promoting the usage of and confidence in EVs, expanding the network of charging facilities, and developing EV supporting industries.

With EVs considered to be an important first step towards realising the next-generation transportation goals as they seek to leverage on digital technology to improve functionality, the Thai government is making efforts to attract significant investment in the EV industry.

Driving the EV ecosystem forward

The National Electronic Vehicles Policy Committee, set up by the Thai government, recently introduced a masterplan which lays out a framework for EV development over 5-, 10- and 15-year timeframes with the aim of transforming the country’s well-established automotive supply chain for the production of battery-powered vehicles and building the technological capacity for modern mobility.

The main objective of the plan is to establish Thailand as “ASEAN’s centre of excellence” in three areas, namely zero-emission vehicles, next-generation automotive technology, and innovation in the next-generation business models by 2035. Individual goals within the plan relate to EV usage, electricity charging facilities, industry capacity building, incentives for EV adoption, and awareness of next-generation transportation. Leveraging on the competitiveness of its skilled workforce and ecosystem in the automotive sector at the global level, the Thai government envisions the country becoming the largest investment hub for EVs in one of the world’s fastest-growing economic blocs, the Association of Southeast Asian Nations (ASEAN)1.

In Thailand’s large automotive supply chain, where more than 2,000 companies operate, 30 global automakers are using the country as their main production base in ASEAN. Thanks to four decades of developing the technical knowhow, labour force, parts production and supporting facilities for the automotive industry, Thailand has established itself as the world’s 11th-largest automobile production base, with a total output of 2.2 million units in 2020.

The progress being made in EV technology also creates tremendous new opportunities for local companies to enter the EV market, as it requires assembly methods that differ from those used in the production of fossil fuel-driven combustion engines. In line with the global EV evolution, Thailand’s flourishing EV market sees international and local entrepreneurs undertaking business ventures in a variety of areas, ranging from the manufacture of passenger and commercial EVs, e-buses, e-motorcycles, electric three-wheelers, and electric boats to the introduction of EV battery plants, charging stations, and home-based charging system services as part of the ongoing conversion from combustion engines to EVs.

Joining the global 30@30 campaign

In line with the “30@30” global collaboration2 in which countries target achieving certain greenhouse-gas reductions, the Thai government has set the goal of having EVs, mostly PHEVs and BEVs, account for one-third of all cars sold in Thailand, or around 750,000 units, by 2030. The projection will see the total number of EVs on the road reach 1.2 million by the end of the current decade. Considering that Thailand had a total of around 200,000 EVs on the road at the end of last year, the government is committed to accelerating investment in and the use of EVs locally over the next five years to strengthen the local EV ecosystem.

In working towards these targets, Thailand is expected to see a complete conversion towards EVs among the public sector and public bus services over the next decade. By 2035, the plan then envisions EVs being the mainstream means of transport in the private sector, particularly BEVs and PHEVs for long distance travel, higher-powered two-wheel EVs for urban use, and three- and four-wheel EVs for the transportation of goods.

Under the Thai government’s plan to gradually phase out internal combustion engine vehicles, the public sector will lead the local adoption of BEVs with a target of all newly procured cars by the public sector being BEVs by 2025 with 15% of cars sold in the private sector also expected to be BEVs by the same year. Supporting the convenience of local EV usage will be 10,000 charging stations across the country at no more than a 50-kilometre radius from one another by 2025, with the number expected to increase to 80,000 charging stations by 2035. Driven by state-enterprises and the private sector, Thailand currently has a total of 650 EV charging stations with around 2,000 chargers out of which 700 are quick charging facilities.

The country’s EV development plan calls for the Thailand Board of Investment (BOI) to expand the scope of investment promotion incentives for multinational and local companies to support industrial capacity building in a wide range of areas, including technology, design and production, market service, innovation, and adaptability. As for the policy to promote technology and innovation development, the target is oriented towards high-technology components such as batteries, drive trains and controller systems as well as EV prototypes.

A competitive digital and energy infrastructure will also cement Thailand’s position as the hub of next-generation transportation with a focus on Connected, Autonomous, Shared and Electricity (CASE) technology in ASEAN, where technology such as IoT, cloud and AI play key roles in driving functionality. Thanks to continued investment in the country’s broadband internet facilities and efficient telecommunications system, Thailand recorded the world’s fastest internet speed based on the Speedtest Global Index in December 20203.

The country’s current power generation capacity reserve of nearly 50% of total capacity, higher than the global average of 15%-20%, reflects the country’s readiness for the development of EVs. Meanwhile, Thailand is committed to developing a “Smart Grid” system which will produce and distribute power in a more efficient way and support the development of EVs in the country.

BOI incentives reinforce Thailand’s EV vision

The Thailand Board of Investment (BOI) recently introduced comprehensive investment promotion incentives to replace the expired package for the EV industry, with a main focus on accelerating the development of the BEV ecosystem and building Thailand up as a manufacturing hub for BEVs, including lithium-ion batteries.

In more detail, the promotional package offers the following incentives:

• 8-year corporate income tax (CIT) exemption for the manufacture of four-wheel BEVs, plus an additional 3-year CIT exemption for the manufacture of four-wheel PHEVs and HEVs in addition to BEVs, while further incentives are available if certain requirements are met.

• 3-year CIT exemption for the manufacture of electric 2-wheelers, three-wheelers, buses and trucks.

• 5 to 8-year CIT exemption for battery packaging and the manufacture of battery modules and cells, and 90% reduction of import duties for 2 years on essential materials used in battery production.

• 8-year CIT exemption for 17 key components of EVs, four of which are new categories.

• 8-year CIT exemption for the manufacture of electric boats.

During 2017-2019, the BOI granted investment incentives to 28 EV manufacturing projects, including 5 HEVs, 7 PHEVs, 14 BEVs and 2 E-Bus projects, with a total investment value of US$ 2,700 million and an annual manufacturing capacity of 570,000 units. In terms of EV parts and batteries, the BOI granted investment incentives to 14 parts and 10 battery manufacturing projects with a total investment value of US$350 million.

BOI revamps electronic vehicle incentives4

1. Manufacture of Battery Electric Four-Wheelers (Investment in BEVs is required.)

Investment of 5 billion Baht or above

• BEVs: 8-year CIT exemption

• PHEVs: 3-year CIT exemption

• HEVs: no tax incentives

*maximum total of 11-year tax exemption available in the case of R&D.

Investment of up to 5 billion Baht

• BEVs 3-year: CIT exemption

• PHEVs 3-year: CIT exemption

• HEVs: no tax incentives

*maximum total of 11-year tax exemption available if all requirements are met.

2. Manufacture of Battery Electric Motorcycles: 3-year CIT exemption

* maximum total of 11-year tax exemption available if all requirements are met.

3. Manufacture of Battery Electric Three-Wheelers: 3-year CIT exemption

* maximum total of 10-year tax exemption available if all requirements are met.

4. Manufacture of Battery Electric Buses and Trucks: 3-year CIT exemption

*maximum total of 10-year tax exemption available if all requirements are met.

5. Manufacture of Battery Electric Boats: 8-year CIT exemption

6. Manufacture of EV Parts and Batteries

• 4 New EV Parts to a total 17: 8-year CIT exemption

• 90% reduction of material import duties for 2 years and 3-8 years of CIT exemption for the manufacture of battery cells and modules.

Thailand’s Transformation Towards Zero-Emission Mobility5

2025

• All vehicles procured for government agencies and public fleets to be zero-emission vehicles (ZEVs)

• 15% of all new vehicles produced to be ZEVs

2030

• All vehicles used by government agencies and public fleets to be ZEVs

• 30% of all new vehicles produced to be ZEVs

2035

• All new vehicles produced to be ZEVs

1 https://www.nxpo.or.th/th/wp-content/uploads/2020/08/POLICY-PAPER-EV-2035-30092020.pdf

2 http://www.cleanenergyministerial.org/campaign-clean-energy-ministerial/ev3030-campaign

3 https://www.bangkokpost.com/business/2054991/thailand-tops-internet-speed-testing

4 Source: Thailand Board of Investment

5 Source: “White Paper for Thailand’s EV Development” by  the Ministry of Higher Education, Science, Research and Innovation and other agencies