BOI Incentives for EV Manufacturing and Battery Production

Introduction to EV Manufacturing in Thailand

EV manufacturing is rapidly evolving as a crucial industry in Thailand, supported by comprehensive incentives from the Thailand Board of Investment (BOI). Strategically positioned in Southeast Asia, Thailand aspires to become the region’s primary hub for electric vehicle (EV) manufacturing. The country’s policies, coupled with BOI incentives, play a significant role in attracting global automotive giants to invest in EV production within its borders.

BOI-Approved EV manufacturing projects

As of May 2022, the BOI has approved incentives for 25 EV manufacturing projects. These include:

Battery Electric Vehicles (BEV): There are 13 projects wholly or partly focused on manufacturing BEVs. These projects represent a significant portion of the BOI-approved initiatives, highlighting the emphasis on fully electric vehicles.

Hybrid Electric Vehicles (HEV) and Plug-In Hybrid Electric Vehicles (PHEV): There are 12 projects dedicated to the production of HEVs and PHEVs. These vehicles combine traditional internal combustion engines with electric propulsion systems, offering a transitional technology toward fully electric mobility.

Key incentives for EV manufacturing

EV manufacturing projects approved by the BOI enjoy a comprehensive range of incentives designed to foster industry growth and development:

Tax Benefits for EV Manufacturing :

Corporate Income Tax (CIT) Exemption: Depending on the investment capital, companies can enjoy up to 8 years of CIT exemption. This exemption is a significant financial relief that encourages both new and existing manufacturers to increase their investment in Thailand.
Import Duty Exemption: Companies are exempt from import duties on machinery and raw materials used in the production process. This incentive reduces the initial costs associated with setting up and maintaining production facilities.
Additional CIT Exemptions: For projects that include research and development (R&D) centers and advanced technology training, the BOI offers extended CIT exemptions. This not only fosters innovation but also ensures that Thailand remains at the cutting edge of EV technology.

Non-Tax Benefits for EV Manufacturing :

Land Ownership Rights: Approved projects can benefit from land ownership rights, allowing companies to own land for their manufacturing facilities, thereby providing stability and long-term investment security.
Remittance of Foreign Currency: Companies are allowed to remit money abroad in foreign currency, facilitating smoother international financial transactions and operations.
Visa and Work Permit Facilitation: Streamlined access to visas and work permits for foreign experts ensures that companies can attract and retain top talent from around the world, which is crucial for maintaining high standards in EV manufacturing.
Support for R&D Activities: The BOI provides financial support for the establishment of R&D (research & development) centers, promoting continuous innovation and development within the EV sector.

Moreover, the BOI urges investors to start manufacturing promptly. Projects that begin production within three years of receiving the BOI promotion certificate qualify for incentives. For example, manufacturers starting BEV production in 2022 receive an extra two years of CIT exemption.

Electrical vehicle battery manufacturing and incentives

In addition to EV manufacturing, the BOI also promotes the production of EV batteries (EVB) and supporting infrastructure such as EV charging stations. BOI incentives for EVB manufacturing are designed to stimulate rapid development and production. These incentives include:

Tax Benefits for EVB Manufacturing :

CIT Exemption: Projects that include the cell production process for EVBs can receive up to 8 years of CIT exemption, significantly reducing financial burdens and encouraging large-scale investments in advanced battery technology.
Import Duty Reduction: Special reductions on raw materials help companies source high-quality materials affordably, maintaining competitive production costs and ensuring end product affordability.

Non-Tax Benefits for EVB Manufacturing :

Land Ownership Rights: Like EV manufacturing, EVB projects are entitled to land ownership rights, offering companies security for long-term investment in Thailand.
Remittance of Foreign Currency: The ability to remit money abroad in foreign currency supports international operations and ensures smooth cross-border financial transactions.
Visa and Work Permit Facilitation: Simplified access to visas and work permits for foreign experts is vital for attracting top-tier talent, essential for successful high-tech manufacturing processes.
Support for R&D Activities: BOI-approved EVB manufacturing projects can receive financial support for R&D activities, fostering innovation and technological advancements in battery production.

The BOI mandates that approved projects must begin manufacturing EV batteries and key components, including traction motors, battery management systems (BMS), and drive control units (DCU), within three years of receiving certification. This ensures timely production and supports a reliable supply chain for the EV industry.

Boosting competitiveness in electric vehicle production

The National Electric Vehicle Policy Committee has approved far-reaching financial and tax incentives to boost Thailand’s EV production capabilities. These incentives include:

Tax Incentives for Enhancing EV Manufacturing :

Tax Deductions for Electric Buses and Lorries: Companies can deduct up to twice the purchase price of vehicles built in Thailand and 1.5 times for imported vehicles, both without caps. This subsidy, valid until December 31, 2025, strongly incentivizes investment in locally produced EVs.
Subsidies for Battery Cell Production: A plan has been adopted to boost the local production of battery cells for electric vehicles and energy storage systems (ESS).
- Companies eligible for this support must meet specific criteria, including being a leading and recognized battery manufacturer, having a clear production plan for EV battery cells, and ensuring high energy density and battery life standards.
- These criteria ensure that only the most capable and forward-thinking companies receive support, driving innovation and quality in the industry.

Non-Tax Incentives for Enhancing EV Manufacturing :

Investment Support: Under the Competitiveness Enhancement Act, companies meeting specific criteria related to battery manufacturing and energy density can receive investment support. This includes financial assistance for setting up production facilities and for research and development activities aimed at improving battery technology.
Regulatory Support: The Thai government provides regulatory support to streamline the approval process for new EV technologies and products, enabling manufacturers to bring their innovations to market swiftly and efficiently.

Thailand’s comprehensive BOI incentives and additional government policies are significantly contributing to the growth of EV manufacturing in the country. The landscape of BOI incentives and government policies can be challenging. Benoit & Partners offer expert guidance and support to help you maximize the benefits available for EV manufacturing and EVB production in Thailand. To ensure a smooth and successful investment process, contact us today to learn more about how we can assist you.