Mahanakorn Partners Group Co. Ltd.

Thailand’s Proposed EV Incentives Signal Further Regulatory Support

Thailand has set ambitious transport‑electrification goals under its EV Roadmap and Carbon Neutrality 2050 commitments. Following the EV 3.5 incentive package launched in late 2025, the government is now developing a new round of measures to increase electric‑vehicle (EV) adoption to around 300 000 vehicles. In April 2026 the Ministry of Transport outlined an action plan consisting of a car trade‑in program and annual vehicle‑tax reductions; the measures are being drafted for cabinet approval and would complement existing incentive frameworks. The proposed schemes have important implications for fleet operators, automotive businesses and investors, particularly those involved in taxi fleets, public transport and EV manufacturing.

Proposed EV trade‑in scheme

Policy design

The government is preparing a trade‑in program to encourage owners of older vehicles—especially taxis and other public‑transport vehicles—to replace internal‑combustion‑engine (ICE) cars with battery‑electric vehicles (BEVs) or hybrids. The Transport Ministry’s April 2026 action plan extends the trade‑in policy beyond private vehicles to include taxi fleets, with the goal of converting up to 300 000 vehicles. Key features of the proposed scheme include:

Regulatory challenges and current status

While the trade‑in program signals a strong push toward electrification, it has faced significant implementation challenges:

✓   Valuation difficulties – Officials have struggled to determine fair values for old vehicles. The Finance Ministry notes that cars of the same age vary widely in condition, making it hard to set standard prices and avoid discretionary assessments. Setting valuations too high or too low could create inequities and disputes.

✓   Scrappage and battery disposal – There is no clear system for scrapping old vehicles and separating parts, metals and batteries. Officials have acknowledged that recycling processes must be developed to ensure environmental safety. Battery disposal is particularly sensitive given hazardous‑waste rules.

✓   Age and eligibility criteria – Authorities have not agreed on whether vehicles need to be five, ten or fifteen years old to qualify; the lack of clear criteria has delayed finalization.

✓   Program revision – Because of these unresolved issues, the Finance Ministry announced in May 2026 that the old‑car trade‑in scheme may be revised or replaced. The ministry warned that prolonged uncertainty could cause consumers to delay purchases and that concrete progress may not appear until mid‑year. In June 2026 the ministry reportedly shelved the old‑car trade‑in plan and ordered development of a new clean‑energy vehicle program, allocating roughly THB 200 billion to support EV adoption and address battery and scrap‑management concerns.

These challenges show that while the trade‑in program represents an ambitious policy tool, its effectiveness depends on clear regulations for valuations, scrappage and local‑content compliance. Stakeholders should monitor the final rules closely.

Vehicle‑tax reductions and existing incentives

Existing Investment Incentives for EV Manufacturing

Thailand already offers significant BOI investment incentives to support the EV industry, covering not only electric passenger vehicles but also electric buses, trucks, motorcycles, three-wheelers, e-bikes, and certain electric vessel manufacturing projects. Depending on the project type and investment value, eligible businesses may receive corporate income tax exemptions ranging from three to eight years, with extensions of up to eleven years in certain cases. These measures form part of Thailand’s broader strategy to promote domestic EV production and strengthen its position as a regional electric mobility hub.

Figure 1. Overview of BOI corporate income tax incentives available for electric vehicle manufacturing projects in Thailand.

Figure 2. Overview of BOI corporate income tax incentives available for electric mobility and electric vessel manufacturing projects in Thailand.

New proposal for 80 % tax reduction

Alongside the trade‑in scheme, the Transport Ministry has proposed reducing the annual vehicle tax for EVs and hybrids by up to 80 %, or waiving it entirely, for a limited period. The earlier 80 % reduction scheme applied to EVs registered between 1 October 2022 and 30 September 2025. That decree expired on 10 November 2025 but reportedly resulted in more than 316 000 EV registrations. The new decree would grant an 80 % tax reduction for one year after registration for EVs registered within three years of the decree’s effective date. Extending tax cuts signals continued fiscal support for EV adoption and may complement the trade‑in program.

Interaction with EV 3.5 incentives

Thailand’s EV 3.5 incentive package (2024‑2027) provides the broader framework for EV promotion. According to trade‑compliance analysis, EV 3.5 reduces subsidies compared with EV 3.0—offering up to THB 100 000 per vehicle instead of 150 000—and imposes stronger local‑production requirements. EV 3.5 includes excise tax cuts from 8 % to 2 %, duty exemptions of up to 40 % on completely built units (CBU) for 2024‑2025, and specified subsidies based on battery size and price. An analysis by ASEAN Briefing further notes that manufacturers must meet local production ratios: two vehicles assembled in Thailand for each imported vehicle in 2026 and three‑to‑one in 2027. These incentives aim to balance rapid EV adoption with long‑term industrial development and local supply‑chain growth.

Legal analysis and implications

Policy alignment and trade obligations

The proposed trade‑in scheme and tax incentives align with Thailand’s commitments to reduce greenhouse‑gas emissions and promote carbon neutrality. By coupling EV subsidies with local manufacturing requirements, the government combines environmental and industrial‑policy objectives: encouraging consumers to adopt zero‑ or low‑emission vehicles while protecting domestic employment and supply chains. This dual approach, however, raises trade and investment considerations. Local‑content rules must be designed consistently with Thailand’s obligations under World Trade Organization agreements and regional free‑trade agreements; overly restrictive requirements could attract challenges from trading partners or deter foreign investors.

Market competition and fiscal sustainability

The EV 3.5 package reduces subsidy levels while increasing local‑production requirements, potentially raising costs for manufacturers and increasing retail prices. With Chinese EV oversupply driving down export prices, Thai manufacturers could face competitive pressure. Policymakers must balance fiscal incentives against budget constraints to ensure that subsidy schemes remain sustainable over the medium term.

Operational implications for stakeholders

✓   Fleet operators and taxi companies – Should prepare for the possibility of mandatory scrappage and recycling conditions. Operators may need to coordinate with authorized recycling facilities and demonstrate compliance to receive subsidies. Monitoring updates to eligibility criteria will be crucial to avoid disruptions.

✓   Automotive manufacturers and investors – Must assess how trade‑in subsidies interact with EV 3.5 local‑production rules and plan production capacity accordingly. Manufacturers should evaluate whether their models qualify for subsidies (e.g., battery size and price thresholds) and whether they can meet the required assembly‑to‑import ratios. Investments in recycling infrastructure may be necessary to address end‑of‑life vehicle obligations.

✓   Financial institutions – Should consider how financing products (e.g., green loans) might support fleet electrification and manage risks related to changing subsidy frameworks. Uncertainty over the trade‑in scheme’s final design could affect vehicle resale values and loan security.

Compliance and governance considerations

Implementation of the trade‑in scheme will likely require regulations outlining eligibility, scrappage procedures, local‑content verification and subsidy disbursement. Absence of clear rules—especially around valuation—has already delayed the programme. To protect against fraud and ensure proper use of state funds, authorities may introduce compliance audits and penalties for non‑compliance. Investors should review contracts and investment promotion privileges to ensure alignment with evolving policies.

MPG’s Perspective

Thailand’s proposed EV trade-in program and vehicle tax incentives demonstrate the government’s continued commitment to transport electrification and the development of a domestic EV manufacturing ecosystem. While the proposals remain subject to further review and Cabinet approval, they signal an increasingly active use of fiscal and industrial policy tools to support Thailand’s energy-transition objectives.

From a legal and commercial perspective, the key issues will be the design of the implementing regulations, particularly in relation to eligibility requirements, vehicle valuation methodologies, scrappage and recycling obligations, subsidy administration, and any local manufacturing or content-related conditions. These factors will be critical in determining both the effectiveness of the program and the compliance obligations imposed on market participants.

For automotive manufacturers, fleet operators, investors and businesses operating throughout the EV supply chain, the proposals may create significant opportunities, but also require careful monitoring of regulatory developments and incentive conditions. The interaction between the proposed measures and existing EV promotion frameworks, including the EV 3.5 package and applicable investment incentives, will be an important consideration in future strategic planning.

MPG will continue to monitor developments and implementing regulations as Thailand’s EV policy framework evolves and will provide further updates as additional details become available.