Are you interested in setting up a company in Thailand’s automotive sector? The country currently offers many incentives for companies seeking to answer the growing demand for Electric Vehicles. This article will explain the process and requirements for starting a company in Thailand’s electric vehicle (EV) manufacturing industry.
Overview of the Thailand EV Manufacturing industry
A look at Thailand’s growing Electric Vehicle market
In recent years, Thailand has seen a significant increase in demand for Electric Vehicles. This combined with the country’s strategic placement for international trade has led to EV investments reaching USD 2.2 billion, a number that is expected to increase by up to 10 times within the next 3 years.
Due to the proximity to Chinese manufacturers, consumers in Thailand also have more variety in terms of affordable electric vehicles. As a response to this, Thailand is preparing to expand its charging infrastructure throughout the country to encourage EV ownership. There are several benefits for foreign investors looking to start an electric vehicle manufacturing company in Thailand:
- Strategic location for sourcing components and parts with neighboring markets in Southeast Asia.
- The Thai Board of Investment (BOI) has added the electric vehicle manufacturing industry to its targeted sectors, leading to potential incentives for foreign businesses.
- Several global EV manufacturers are looking to establish partnerships for setting up a supply chain in Thailand.
- The country boasts several Free Trade Zones which are specially designed for setting up manufacturing facilities, with pre-constructed factories and simplified logistics.
- Thailand already has a strong automotive industry, meaning that foreign companies can benefit from experienced highly skilled labor.
Government incentives for investing in the EV industry
Thailand is actively fostering the development of a localized supply chain for the Electric Vehicle industry. To encourage further growth the Thai government and the country’s BOI have implemented several incentives and benefits for foreign investors and entrepreneurs seeking to set up operations. These incentives extend to EV automotive and component manufacturing:
- Corporate Income Tax (CIT) Exemptions: EV manufacturers can benefit from CIT exemption for a period of up to 13 years, with additional tax holidays also being available for BOI-promoted companies.
- Import Duty Exemption: Thailand offers exemptions from import duties on machinery and raw materials used in research and development (R&D) within the EV sector.
- Excise Tax Reduction: The government has significantly reduced the excise tax for electric cars from 8% to 2% to facilitate manufacturing.
- Import Duty Cuts: Manufacturers can take advantage of import duty cuts of up to 40% for completely built-up EV units.
Emerhub’s local advisors will help you prepare for your market entry by identifying the best way to set up your operations in Thailand’s EV manufacturing industry to ensure that you benefit from any applicable government benefits. Our regulatory compliance team can also help you manage corporate income taxes to ensure that you don’t miss out on newly added exemptions.
What challenges should you consider for setting up an EV automotive manufacturing facility in Thailand?
Despite the many benefits offered by the government for setting up automotive manufacturing in Thailand’s EV industry, it is important that you also take potential challenges into account. Below you’ll find the most common challenges faced by foreign-owned EV manufacturers in Thailand:
- Competition: The EV market is seeing increased competition from both established automakers in Thailand and emerging Chinese brands. Innovation and differentiation are key for standing out from the crowd.
- Infrastructure Development: Thailand’s progress in charging infrastructure development is promising and seeing a rise in investments, but is still an ongoing process. Manufacturers need to consider this when setting production goals.
- Supply Chain Disruptions: While global supply chain disruptions can pose challenges, proactive measures and strategic partnerships can mitigate their impact on the availability and cost of EV components.
Emerhub can help you navigate potential hurdles when establishing your legal entity in Thailand. Our team can also assist you in identifying potential partnerships and in undergoing due diligence checks.
How to register an EV car manufacturing company in Thailand
Types of legal entities for Electric Vehicle manufacturing in Thailand
When you set up a foreign-owned EV car manufacturing company in Thailand, you must determine the right legal entity for your operations, as well as whether or not you need to apply for special permits. The most common type of company for foreign investors is the Limited Liability Company, however, special licensing can be beneficial for EV manufacturing:
| Legal entity type | Limited Liability Company | Foreign Business License (FBL) Company | Board of Investment (BOI) promoted company |
| Foreign ownership limits | 49% | 100% | 100% |
| Registration requirements | You must have at least one Thai partner | Demonstrated benefit to the Thai economy. You must secure an FBL. Minimum capital of THB 3 million | Demonstrated innovation, technology, or investment in a targeted industry. Must undergo a thorough evaluation by BOI. |
| Registration timeline | 2 weeks | Up to 4 months | Up to 1 year |
| Benefits | Does not require minimum capital or special licenses. Allows dividing ordinary and preferential shares to maintain foreign controlling rights. | Allows foreign companies to operate in restricted industries. | Tax incentives. Unlimited foreign hiring. Possible land ownership |
We recommend setting up an LLC first and then looking at whether or not your EV business is eligible for BOI promotion or if your operations require an FBL. Emerhub can help you set up your Thai operations through our company registration service in Thailand. We can also help you navigate the BOI application process for your electric vehicle manufacturing business.
Requirements and regulations for operating in Thailand’s EV manufacturing sector
While the country is actively promoting the EV sector, there are also several compliance regulations that have been established to manage the industry’s performance and requirements for securing subsidies. If you are planning to start a company in Thailand’s electric vehicle industry, Emerhub can help ensure compliance with the following regulations:
- Local production requirements (for promoting domestic EV manufacturing):
- Production Ratios: For every imported EV car, manufacturers might be required to produce a certain number of EVs in Thailand by a specified year.
- Electric Motorcycle Subsidy Requirement: Electric motorcycles manufactured in Thailand are eligible for subsidies from the government.
- Subsidies:
- EV Car Subsidies: Thailand offers subsidies of up to THB 100,000 per EV car purchased.
- Electric Motorcycle Subsidies: If you manufacture electric motorcycles in Thailand with specific battery capacity and price limits, your company can qualify for subsidies.
- Environmental regulation:
- 30@30 Policy Plan: In a commitment to decarbonizing the transportation sector, Thailand aims to have 30% of its total vehicle production be zero-emission vehicles (ZEVs) by 2030.
- Labor regulations:
- Foreign Worker Permits: The Foreign Working Act mandates that all foreign workers in Thailand, including those in the EV industry, obtain work permits and relevant work visas.
How to import goods and materials for your Electric Vehicle manufacturing supply chain in Thailand
It is common for EV manufacturers to source certain components and materials from neighboring countries, especially with the Thai government extending import duty reductions of up to 90% for materials used for manufacturing EV batteries domestically. Reduced import duties of 40% also apply for shipments of Completely built-up (CBU) EV units.
Despite these incentives, your company must acquire a Free Sale Certificate and an Import License before importing certain types of materials. The exact documents you will require can vary depending on the types of goods you intend on importing and whether they are regulated by the Thai authorities.
Alternatively, Emerhub can act as your consignee through our Importer of Record service. We already have local resources and logistics, and our experts can navigate all the key steps like pre-shipping compliance and customs clearance in your stead. This allows you to start importing your materials from anywhere virtually immediately.
If you are interested in starting a company in Thailand’s booming EV automotive industry, contact us via the form below to set up a consultation with our team!
