The debate between consumers enjoying cheap imported EVs from China versus protecting the local automotive industry isn’t unique to Malaysia. While we’re having a debate here, a coalition of 10 automotive associations representing more than 1,500 operators in Thailand is lobbying for the government to raise taxes for CBU EVs to protect the Thai automotive ecosystem. According to a report by The Nation, The Electric Vehicle Association of Thailand (EVAT), the Thai Auto-Parts Manufacturers Association (TAPMA) and allied industry groups will submit emergency proposals to the government today, May 14, asking for a raise in excise tax on CBU EVs to at least 32%, as part of measures to stabilise Thailand’s auto and parts industries. The group of stakeholders warned that Thailand’s automotive industry is facing its ‘most serious crisis’ as the country shifts towards EVs. It said the a rapid transition to EVs, combined with the cost advantage of CBU imported models from China, could ‘severely weaken local production and threaten the survival of Thai auto-parts manufacturers’. It added that producing vehicles in Thailand costs around 30% to 40% more than importing similar cars from China, and this puts local manufacturers and parts suppliers at a disadvantage. As such, the associations want the excise tax on CBU EVs to be raised to at least 32%, creating a 30-percentage-point gap with domestically produced EVs, which are currently subject to a 2% excise tax. The group reasons that the higher tax would help offset the cost gap between CKD and CBU EVs, while encouraging carmakers to continue investing in local production. The call for the government to introduce stronger replacement measures is amidst fear that once Thailand’s current ‘EV 3.5’ support scheme ends, Chinese carmakers will revert to importing CBU EVs instead of continuing production in Thailand. The coalition is also proposing a ‘carrot’ in the form of an import quota system linked directly to local production. Under the proposal, companies that make genuine investments in vehicle production in Thailand would be allowed to import CBU EVs at the existing lower excise tax rate of 10%. The quota would be capped at no more than 10% of each company’s production volume, however. Finally, the group is also seeking for an 80% local content rule, with the figure referring to a vehicle’s value. They’re seeking a revised calculation method to close loopholes, adding that the current system should be tightened to prevent profits or labour costs from being counted in ways that ‘weaken the intended support for Thai parts manufacturers’. This is what the parties affected by the Chinese EV wave want, so now the ball is in the Thai government’s court to balance the promotion of EVs with the need to protect domestic manufacturing, jobs and the country’s well-established auto-parts supply chain. It’s a fact that local production – whether in Thailand, Malaysia, ASEAN or anywhere else in the world – will be costlier than what Chinese OEMs can achieve back home, and if these carmakers have a choice, it’ll be CBU, as exports also help ease the massive (and often excess) capacity that they’ve built in China. If a country has an automotive industry to protect, the only thing that can stop the tsunami is a seawall in the form of tariffs and duties. That is what Malaysia has done with MITI’s recent move to raise the barrier for CBU EVs – we’ve covered this topic extensively, and you can read more here. Looking to sell your car? Sell it with Carro. Compare prices between different insurer providers to save the most on your car insurance renewal compared to other competing services. Many payment method supported and you can pay with instalment using Atome, Grab PayLater or Shopee SPayLater. Use the promo code 'PAULTAN' when you checkout for 10% discount!
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