Thailand’s EV demand challenges its ‘Detroit of Asia’ ambitions

Demand for electric vehicles is increasing in Thailand, with the energy crisis stemming from the war in the Middle East igniting further interest among consumers. This rapid growth has, however, revealed another challenge to the country’s ambition to retain its position as a regional automotive hub.

Currently, over 60% of all imported EVs are from China. The shift has prompted calls for tax reforms and stronger local-content requirements, to ensure that the EV transition also strengthens Thailand’s domestic supply chain.

“Putting only tax-based barriers on imported electric vehicles may not be a right solution for everything,” Krisda Utamote, Honorary Advisor, Electric Vehicle Association of Thailand (EVAT) commented.

“We have to really ensure that not only do we enjoy the benefits from having new technology from the influx of imported EVs, but we also have to build the full car manufacturing chain in Thailand to absorb the growing demand for EVs locally.”

Demand for EVs and related policies

Thailand’s government has ambitious growth plans for emerging industries, including EVs. It also hopes to become a so-called ‘EV hub’ in the region, while also evolving into a low-carbon society.

The Thai government’s national EV board has a policy known as “EV 3.5” to support investment in the manufacturing of electric vehicles in Thailand and to provide subsidies for the purchase of electric cars, pickup trucks and motorcycles.

The government has split its EV transition into three phases.

The first phase, between 2021 and 2022, was to create domestic demand for electric vehicles, starting with electric motorcycles and developing EV infrastructure. The second phase, from 2023 to 2025, focused on establishing EV and battery production in Thailand to meet domestic demand. The third and current phase, from 2026 to 2030, aims to increase EV production to 30 percent by 2030, with a longer-term target of 50 percent by 2035.

Investment in Thailand’s EV supply chain is also growing.

According to Thailand’s Board of Investment (BOI), the country has secured over 137 billion baht spanning 198 projects covering the entire EV ecosystem, from electric vehicle production, investment in developing batteries and energy storage systems to critical components and charging infrastructure.

Earlier this year, at the Bangkok International Motor Show 2026, a record-breaking 130,000 cars were booked, 65% of which were Chinese EVs, showing increasing domestic demand.

Meanwhile, at least 11,165 cars were booked at a mid-year motor exhibition, the ‘Big Motor Sale 2026’, an increase from 6,500 the year before, underscoring strong demand as more EV brands are entering the market.

“EV sales in Thailand will increase significantly compared to 2025 because, this year, there are a lot of brands coming in and I think people are more open-minded to using EVs,” Juthamas Khanmanee, the co-chair of ‘Big Motor Sale 2026’, told Thai PBS World.

Tax and structural issues

While EV demand is increasing in Thailand, structural issues still need to be addressed.

For decades, Thailand has been known as the ‘Detroit of Asia’, being one of Southeast Asia’s largest automotive production bases. The country’s industry has, however, traditionally been built around internal combustion engines. Therefore, the transition to EVs is now changing the structure of the entire industry.

According to the Electric Vehicle Association of Thailand (EVAT), about 140,000 electric vehicles were registered during the first seven months of 2026. Thailand imports over 60% of EVs from China, worth about 1.68 billion US dollars during the first 7 months of 2026. Under the ASEAN-China free trade agreement, fully built EVs imported from China are subject to zero import duty.

Imported and locally produced EVs, however, are subject to a different tax regime.

Locally produced EVs are subject to a 2% rate, compared with 10% for imported EVs. Industry leaders say the difference is not enough to encourage carmakers to invest in EV manufacturing in Thailand.

EVAT President Suroj Sangsnit explains that revising the duty on imported EVs is to strengthen the country’s domestic supply chain. He also feels that the country’s status as the ‘Detroit of Asia’ is gradually weakening, due to the influx of imported EVs from other countries.

“Major automakers that have operated factories in Thailand for decades are now starting to import EVs from China,” Suroj commented.

“If this trend continues, and if the government does not revise the excise tax structure, Thailand could eventually become entirely dependent on vehicle imports from China. That means our dream of remaining the ‘Detroit of Asia’ could disappear altogether.”

Thailand is not the only country competing. Vietnam has the government’s strong support for domestic EV production, while Indonesia is using incentives to attract investment in EVs, batteries and related supply chains.

The challenge for Thailand is not only about attracting investment. As a long term strategy for EV transition, it should also level up its value chain, particularly the development of related technologies.

“Now I think what we have to focus on is how we can really grow the overall technologies in Thailand, making sure that we still attract research and development to the country, not just manufacturing, but on the added processes of the automotive industry, like design, testing, facilities, research and development,” Krisda commented, while adding that such areas have much higher value than just manufacturing alone.

2026 projection

Meanwhile, the Kasikorn Research Centre predicts that Thailand’s automotive production will reach 675,000 cars in 2026, an 8.7 percent increase from last year, with growth of electric vehicle production expected at about 210,000 units. The market share of electric vehicles is expected to expand to about 60 percent compared to traditional internal combustion engines.

The category seeing the highest growth are battery electric vehicles (BEVs), the market share of which is expected to rise from 20% in 2025 to 31% this year. Hybrid electric vehicles (HEVs) are expected to increase to 27% this year, while Plug-in electric vehicles (PHEVs) remain at 3%.

Consequently, internal combustion engines continue to decline, falling from 78% in 2023 to 39% this year.

Although the market share of EVs is increasing, most are still imported, most of them from China. The centre estimated that the market share of Chinese EVs will jump from 13% in 2024 to 32% of all electric vehicles registered in Thailand in 2026.

Kevalin Wangpichayasuk, K-Research Centre’s Deputy Managing Director, pointed to several factors driving this growth, including volatile fuel prices and the government’s incentives under EV 3.5, which have intensified competition between EV brands.

“More EV brands entering the market is another factor in this growth, and with incentives supporting it, the popularity increases even further. Some brands have reduced their prices in order to attract new consumers, while consumers themselves have more EV models to choose from at affordable prices. This has led to double-digit sales of EVs in recent months.”

In order to strengthen its own EV supply chain, however, Kevalin suggests that the government should level the playing field, by reviewing tax measures and ensuring the use of local produced car parts and component.

“I think the key is to focus on encouraging more production in Thailand, particularly by increasing the use of local content and locally sourced components. This is probably the most important thing we need to focus on right now, because it will help address the challenges we’re facing and gradually improve the situation. I think this should be our top priority.”

Beyond incentives

The National EV Board has already announced that it will propose a new ‘3-Tier’ tax structure for EVs, aiming to secure Cabinet approval by the end of September 2026.

The first tier, the lowest tax rate, applies to those manufacturing their vehicles in Thailand with high local content. The second tier applies to companies that currently import vehicles, but plan to establish manufacturing bases in Thailand. The third, the highest tax rate, applies to those importing vehicles only.

The Federation of Thai Industries voiced strong support for the proposed overhaul to boost local EV supply chains.

Regardless, advancing Thailand’s EV industry goes beyond incentives. Industry leaders hope to see a broader strategy, from strengthening local supply chains and encouraging joint ventures to research and development capabilities.

The challenge for Thailand is no longer about whether consumers will switch to electric vehicles, but whether the country can turn rising EV demand into a competitive domestic industry.

EVAT’s president suggests that the government roll out policies that strengthen local supply chains and components manufacture, while also encouraging joint ventures in EV production.

He also hopes to see more EV transition in public transportation, such as taxis, public buses and motorcycles, as well as the EV charger infrastructure to keep up with the increasing number of EVs on Thai roads.

“I would like to see the Thai government promoting more joint ventures. Even if foreign carmakers set up manufacturing bases here and employ Thai workers, we can learn their technology and become experts. If Thai companies can partner with them, we can acquire that technology, build on it and eventually develop our own products, as China has done,” Suroj concluded.