BANGKOK, Thailand — Thailand’s automotive and auto parts industry associations are urging the government to impose a 32% import duty on Chinese battery electric vehicles (BEVs), warning that a potential surge in imports following the expiration of current incentive programs could severely undermine the country’s domestic manufacturing sector and supply chain.

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The call to action comes as industry leaders express concern about the long-term implications of the EV3.5 scheme, a government incentive program running from 2024 to 2027 that offers tax cuts and subsidies to automakers in exchange for investment in BEV assembly plants within Thailand. Under the scheme, participating companies must maintain a production-to-import ratio, requiring them to produce two BEVs locally for every one imported between 2024 and 2025, with the ratio increasing to three locally produced vehicles for every imported unit by 2027.

However, executives from the Electric Vehicle Association of Thailand (EVAT) and nine other industry groups fear that Chinese automakers may scale back or halt local production entirely once they have satisfied the minimum requirements under EV3.5, potentially flooding the Thai market with imported vehicles while bypassing domestic manufacturing commitments.

“Once Chinese manufacturers meet their obligations under the incentive scheme, there is a real risk they could shift strategy and prioritize imports over local production,” warned an EVAT executive who requested anonymity due to the sensitivity of ongoing policy discussions. “Such a move would deal a serious blow not only to Thailand’s BEV manufacturing sector but also to the extensive network of auto parts makers and suppliers that depend on steady production volumes.”

To address these concerns, EVAT and allied associations plan to submit a formal proposal to the government calling for a 32% import duty on Chinese BEVs. While Chinese automakers currently benefit from zero tariffs on BEV imports under the ASEAN-China Free Trade Agreement, imports remain subject to other duties depending on vehicle classification. Companies participating in the EV3.5 scheme receive additional reductions on certain duties, providing them with a competitive advantage in the Thai market.

Industry analysts argue that without stronger protective measures, Thailand’s auto parts sector—which comprises approximately 1,700 companies under the Federation of Thai Industries—faces significant vulnerability. Most of these firms are small or medium-sized original equipment manufacturers categorized as tier 2 and tier 3 suppliers, which typically provide components to larger tier 1 producers that are often subsidiaries of global carmakers.

“In a market dominated by large foreign manufacturers, our smaller suppliers are the first to suffer when production shifts overseas,” said a representative from the Thai Auto Parts Manufacturers Association. “Protecting local content requirements isn’t just about economics; it’s about preserving jobs and industrial capability.”

Beyond import duties, the associations are also urging the government to tighten local content requirements for electric vehicle production. Under current Board of Investment guidelines, global EV producers receiving investment incentives must source 40% of their EV components domestically. The industry groups are proposing to raise this threshold to 80%, arguing that higher local content would strengthen Thailand’s supply chain resilience, foster technological development, and safeguard employment across the manufacturing ecosystem.

“Thailand has built a robust automotive ecosystem over decades,” noted a Bangkok-based industry analyst who requested anonymity. “The transition to electric vehicles presents both opportunity and risk. If we don’t structure our policies carefully, we could find ourselves assembling vehicles with imported parts while losing the deeper industrial capabilities that have defined our sector.”

Concerns over sluggish domestic car sales have already prompted the National EV Policy Committee to ease certain production rules. Under a revised framework, each BEV produced for export now counts as 1.5 units toward the quota, providing automakers with greater flexibility in meeting their obligations. However, industry leaders remain wary that such adjustments, while helpful in the short term, may not adequately address the strategic positioning of Chinese manufacturers in the regional market.

Thailand's automotive and auto parts associations are urging the government to impose steep import duties on Chinese battery electric vehicles (BEVs), warning that once the EV3.5 incentive scheme ends, a surge in imports could severely damage the domestic car industry.

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“A flood of Chinese EVs would hurt local BEV manufacturing, auto parts makers, and suppliers across the board,” the EVAT executive emphasized. “We are hoping to submit and discuss these proposals with the government as soon as possible to ensure that Thailand’s automotive transition benefits our domestic industry.”

The associations plan to meet with officials from the Ministries of Finance and Industry to present their case and explore potential policy adjustments. Key discussion points are expected to include the structure and timing of import duties, mechanisms for verifying local content compliance, and strategies for supporting small and medium-sized enterprises during the industry’s electric transition.

Thailand has long positioned itself as the “Detroit of Asia,” serving as a major production hub for conventional vehicles and increasingly for electric models. The country’s strategic location, established supply chains, and government incentives have attracted significant investment from global automakers seeking to serve both domestic and export markets. However, the rapid rise of Chinese EV manufacturers—backed by substantial state support and advanced battery technology—has introduced new competitive dynamics that challenge traditional industry structures.

Government officials have not yet issued a formal response to the associations’ proposal, though sources familiar with policy discussions indicate that the Ministry of Finance is reviewing various options for balancing consumer access to affordable electric vehicles with the need to protect domestic industrial capacity.

“For policymakers, the challenge is finding the right equilibrium,” said a former trade official who spoke on condition of anonymity. “Too much protection could raise prices for consumers and slow EV adoption; too little could erode the industrial base that has supported Thailand’s economy for generations.”

Consumer advocacy groups have expressed mixed views on the proposed import duties. While some acknowledge the importance of protecting local jobs, others worry that higher tariffs on Chinese EVs could limit affordability and slow the transition to cleaner transportation.

“Electric vehicles offer significant environmental and economic benefits, but only if people can actually afford them,” said a representative from a Thai consumer rights organization. “Any policy discussion should consider both industrial protection and accessibility for everyday buyers.”

As the debate unfolds, Thailand’s approach to managing the electric vehicle transition is being watched closely by neighboring countries facing similar questions about industrial policy, foreign investment, and technological sovereignty. The outcome could influence regional strategies for balancing open markets with domestic development goals.

For now, industry associations remain focused on advancing their proposals through official channels. “We are committed to constructive dialogue with the government,” the EVAT executive stated. “Our goal is not to block competition but to ensure that Thailand’s automotive transformation creates lasting value for our workers, our companies, and our economy.”

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Further updates regarding government responses, policy deliberations, and industry negotiations are expected as discussions between automotive associations and ministry officials proceed.

-Thailand News (TN)