Thailand Rewrites EV Subsidy Program to Cope With China-Led Glut
Thailand has adjusted its electric vehicle subsidy program to encourage carmakers to export, as its domestic market is suffering from overcapacity and cutthroat price competition fueled by a surge of Chinese investment.
On Tuesday, Thailand’s National Electric Vehicle Policy Committee approved revised incentive rules that reward exports. Under the updated program, each electric vehicle (EV) exported from Thailand will count as 1.5 units toward the automaker’s local production commitments — effectively allowing firms to meet domestic requirements by shipping cars abroad.
The change comes as the country grapples with a glut in EV manufacturing, the result of generous subsidies introduced in 2022 under the EV3.0 and EV3.5 programs. These initiatives promised cash incentives for both imported and domestically assembled EVs, provided carmakers pledged to eventually localize production.
Previously, automakers were required to produce one locally assembled EV for each subsidized import in 2024, rising to a 1.5-to-1 ratio in 2025. The exports credit now allows automakers to reach that goal faster, potentially alleviating inventory pressures in a sluggish domestic market.
Thailand’s Board of Investment reports that 21 pure-electric vehicle projects are underway, representing an investment of 41.08 billion baht ($1.26 billion) and a combined annual production capacity of 386,000 vehicles — far outpacing local demand. Domestic EV sales reached roughly 70,000 in 2024 and totaled around 57,000 in the first half of 2025.
The Federation of Thai Industries projects the new measure will stimulate EV exports to reach nearly 12,500 units in 2025 and grow to around 52,000 units in 2026.
Chinese automakers have dominated investment inflows, with firms such as SAIC Motor Corp. Ltd., Great Wall Motor Co. Ltd., BYD Co. Ltd., Guangzhou Automobile Group Co. Ltd. and Chongqing Changan Automobile Co. Ltd. setting up production in Thailand. Their aggressive pricing strategies have led to market tensions, including complaints filed against BYD in July 2024 after the company cut prices shortly after consumers made purchases.
“More and more new players are bringing in products with good specifications but lower prices. We can only cut our prices,” a BYD employee told Caixin.
A former employee at SAIC in Thailand told Caixin that “the Thai domestic market cannot digest so much EV capacity.”
The cost of producing a car in Thailand is about 15% higher than in China, making government support critical to fostering a competitive export business, said the SAIC source.
Thailand’s push to become an EV export hub faces regional competition, particularly from Indonesia. Since June 2025, GAC Group Ltd. and XPeng Inc. have successively started production at their Indonesian plants, and a BYD factory in the country is expected to come online in late 2025 or early 2026.
Contact reporter Han Wei (weihan@caixin.com)
caixinglobal.com is the English-language online news portal of Chinese financial and business news media group Caixin. Global Neighbours is authorized to reprint this article.
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