Updated “EV3.5” scheme to boost EV sales and foreign investment as industry gains momentum

On November 1, the Government of Thailand approved an updated electric vehicle purchase subsidy scheme, “EV3.5,” which would provide consumers with up to 100,000 baht (US$2,760) for each domestically produced EV purchased between 2024 to 2027. The subsidy program signals Thailand’s commitment to supporting the growth of the EV industry and increasing foreign investment as it aims to position itself as Southeast Asia’s EV production hub. By 2030, Thailand hopes EVs will account for 30% of all vehicles sold. The new program reflects the growing consumer demand for EVs, as the subsidy has decreased from the 150,000 baht offered under the current “EV3.0” scheme. Set to expire on December 31 this year, “EV3.0” helped put out over 50,000 EVs on the road so far this year, helping Thailand account for around half of all EV sales in Southeast Asia in the second quarter.

On the production side, “EV3.5” also includes two amendments that will offer more flexibility for foreign manufacturers. Currently, foreign companies can offset imports to Thailand by domestically manufacturing an equal number of EV units. Further easing of these restrictions, alongside other manufacturing subsidies and incentives, are efforts to enhance the FDI attracting competitiveness to attract European and other foreign producers to set up production in Thailand. Thailand’s EV ecosystem is already home to companies such as Horizon Plus, a subsidiary of Taiwan-based Foxconn Technology Group, and Chinese battery giant CATL have announced partnerships with Thai companies. Thailand has become an attractive option for Chinese carmakers to diversify their manufacturing of EVs in Southeast Asia amid scrutiny from the European Union that Chinese state-subsidized electric vehicles are disrupting global markets. These efforts show Thailand sustained efforts to build a robust EV battery supply chain and increase joint ventures in lithium mining, conversion, and battery recycling opportunities.