Thailand's Auto Industry Calls for 32% Tax on CBU EVs to Protect Local Manufacturers

Faced with the overwhelming influx of affordable Chinese electric vehicles (EVs), Thailand's automotive industry has reached a breaking point.

On May 14, a powerful coalition of 10 major automotive associations submitted an urgent proposal to the Thai government, demanding a significant increase in excise tax on CBU (Completely Built-Up) imported EVs — raising it to at least 32%. The goal is to protect the local automotive supply chain, which is currently facing its most severe crisis in decades.

For Malaysia, which faces similar challenges in balancing affordable EVs with industrial protection, Thailand's situation serves as an important case study.

A Battle for Survival 

Led by the Electric Vehicle Association of Thailand (EVAT) and the Thai Auto-Parts Manufacturers Association (TAPMA), the coalition represents over 1,500 companies. They argue that China's cost advantages, combined with existing policy loopholes, are threatening the survival of local parts suppliers.

Their key demands include:

• A 30% Tax Gap: Currently, locally assembled (CKD) EVs enjoy a low 2% excise tax, while CBU imports are taxed at 10%. The industry wants this gap widened by imposing a 32% tax on CBU EVs to strongly encourage local production.
• Tighter Localisation Rules: Raising the local content requirement to 80%. They pointed out that the current 40% threshold is often bypassed by inflating profit margins or labor costs. The new proposal calls for strict audits to ensure core high-value components (chassis, bodywork, etc.) are made in Thailand. 
• Import Quota System: Only manufacturers with substantial local investments (including R&D centres, charging networks, and battery recycling) would receive CBU import quotas, limited to 10% of their local production volume.

The Cost Reality: Local Manufacturing is 30–40% More Expensive

The Thai industry has been blunt: producing an EV in Thailand costs 30% to 40% more than importing one from China. Without stronger tax barriers, Thailand's long-held status as the "Detroit of the East" could collapse rapidly.

Malaysia's "Tsunami Barrier"

While Thailand is still in the lobbying phase, Malaysia's Ministry of Investment, Trade and Industry (MITI) has already taken proactive steps. Recent policies include:

• A RM200,000 CIF floor price for imported CBU EVs, effectively pushing retail prices above RM300,000.
• A minimum 180 kW (approx. 241 hp) power output requirement for imported EVs.

The clear objective is to protect the mass market (RM100,000–RM200,000 segment) for national brands like Proton and Perodua, particularly models such as the upcoming Proton e.MAS 5, from being undercut by low-priced Chinese imports like the BYD Dolphin and GWM Ora Good Cat.

Conclusion: Protectionism or Open Market? 

For consumers in both Malaysia and Thailand, higher taxes mean more expensive cars. However, for the national economy, these protective measures are seen as essential to safeguard the local automotive ecosystem and tens of thousands of jobs from being wiped out by aggressive pricing.

The tension between offering "cheap cars" and protecting local livelihoods is only just beginning.