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The Philippines has yet to pull in a major domestic BEV manufacturer, unlike its Southeast Asian neighbors, Thailand and Indonesia
MANILA, Philippines – The Philippines may soon join other ASEAN countries in offering electric vehicle (EV) tax breaks and manufacturing incentives, with a key decision from the Fiscal Incentives Review Board (FIRB) expected in July.
On June 11, the Department of Trade and Industry (DTI) approved a proposed incentives strategy for EV manufacturing. The plan still needs the rubber stamp from the FIRB and the Office of the President.
The approved Electric Vehicle Incentive Strategy (EVIS) is projected to attract billions of pesos in capital investments, according to a DTI press release on Monday, June 23.
The department did not specify details of the plan, but it claims the policies could create 680,000 jobs. These include jobs in EV assembly, battery production, charging station installation, and maintenance services.
However, the DTI did note that incentives will go beyond passenger cars, covering two- and three-wheelers, buses and trucks, along with nearly 400,000 charging stations.
Competing with foreign BEVs in domestic markets
Local assembly of battery electric vehicles (BEVs) remains limited. As of 2024, most BEVs sold in the Philippines are imported. The country has yet to establish a major domestic BEV manufacturer, unlike its Southeast Asian neighbors, Thailand and Indonesia.
Chinese electric car and battery company BYD sold the most BEV units in the Philippines in 2024, accounting for a 69% market share. BYD has become the world’s leading electric vehicle seller, surpassing Tesla in total BEV sales in 2023.
BYD, along with other popular brands like Tesla, manufactures its EVs abroad for import, primarily in China. BYD in 2024 just opened its first plant in Southeast Asia in Thailand.
In 2023, Indonesia and the Philippines competed for a bid to host another billion-dollar BYD manufacturing facility. The Philippines ultimately lost, and the plant in Indonesia is expected to be completed by the end of 2025.
More recent competitors include Vietnam’s Vingroup, which launched its VinFast electric vehicles in the Philippines in May of this year.
Toyota Motor Philippines dominates the local hybrid-electric vehicle (HEV) market but currently offers no BEV models in the Philippines.
EV importers don’t face import taxes, increasing the affordability of foreign-made vehicles.
In May 2023, the then-National Economic and Development Authority (now the Deparment of Economy, Planning anbd Develpment) reduced tariffs on all imported EVs to zero, a policy set to remain in effect until 2028. It remains unclear whether the EVIS plan will scale back the tariff exemption to encourage local manufacturing.
ASEAN neighbors set the pace
Other ASEAN-6 countries — Singapore, Malaysia, Indonesia, the Philippines, Thailand, and Vietnam — offer a range of EV tax breaks and incentives aimed at boosting sales and local production.
Indonesia offers a value-added tax (VAT) discount on EV purchases, from 11% to 1%, for vehicles that meet local content requirements. It also waives import duties for manufacturers that commit to building domestic factories by 2026. BYD took advantage of these policies with its planned plant, allowing it to temporarily import EVs without duties.
Thailand reduced its excise tax on electric cars from 8% to 2% and allows manufacturers up to 40% cuts on import duties for completely built-up units.
Singapore, Thailand, Vietnam, Indonesia, and Malaysia all saw double- or triple-digit growth in EV sales in 2024, according to a report from Singapore’s Maybank.
The Philippines, still finalizing its EV incentive strategy, has yet to see similar levels of growth. If implemented, the EVIS plan may help attract investment and expand local EV adoption — but domestic manufacturers will need to compete in an already crowded field.
Mostly in the form of various tax cuts, the incentives primarily target consumer uptake, rather than attracting manufacturing businesses.
Electric vehicle owners are exempt from “number-coding” traffic schemes under the Electric Vehicle Industry Development Act (EVIDA), which took effect in April 2022.
Hybrid vehicles are subject to 50% of the excise tax rate applied to conventional automobiles, while fully electric or battery electric vehicles (BEVs) are exempt as outlined in the Tax Reform for Acceleration and Inclusion (TRAIN) Act, implemented in 2018. – Rappler.com
Ty Javier is an Economics undergraduate student at the University of Wisconsin. Before interning at Rappler, he was a senior staff writer and photographer at The Daily Cardinal, specializing in university and campaign finances, economic policy and transit.
