BANGKOK -- Thailand has rolled out a package of incentives to promote the manufacturing of electric vehicles, as the country known as "the Detroit of Southeast Asia" seeks to lure younger Chinese companies with new-energy technologies.
Under the program, business segments undertaking 5 billion baht ($165 million) or larger electric vehicle projects will be exempt from corporate taxes for eight years. Four types of core parts are also eligible, including reduction gears and regenerative braking systems.
The goal is to increase electric vehicles' share of domestic EV production to 30% in 2030.
The Thailand Board of Investment approved the package "to answer the radical changes underway in the global car industry," said Duangjai Asawachintachit, the BOI's secretary-general. She added that the measures will "accelerate the development of EV production and the related supply chain in Thailand."
The latest package follows the 2018 expiration of a similar electric car policy. The new measures were introduced out of " frustration that EV production is not growing," said Hajime Yamamoto, senior manager at the Nomura Research Institute Thailand.
In the previous program, 26 plans were approved, including those for plug-in hybrids, with many pursued by Japanese manufacturers. Production is underway on just two electric vehicle projects, both by startups. Big players such as Toyota Motor and Mitsubishi Motors are giving priority to plug-in hybrids, putting electric cars on the back burner.
Japanese manufacturers have dominated Thailand's auto market, accounting for about 90% of the roughly 2 million vehicles built a year. But Chinese companies possessing electric car technologies have gained ground in recent years. Great Wall Motors is set to bring an electric vehicle factory online as early as 2021 and is expected to apply for the new incentives. SAIC Motor, which already has operations in Thailand, plans to start building electric autos as well.
Japanese automakers, which account for 90% of 2 million annual auto production in the country, could see their overwhelming advantage erode if they fail to adapt to the region's rapid shift to EVs.