Governments are racing to implement a wide range of manufacturing and sales incentives for electric vehicles (EVs), part of their overall plans to reduce carbon emissions.

Thailand, for instance, has implemented substantial tax breaks for EV production, slashing excise tax from 8% to 2% for models priced under THB2 million ($58,500). Further subsidies are also offered to EV makers investing in research and development (R&D) facilities or relocating their headquarters to the country.

To promote EV ownership, governments are also doling out financial incentives. In Singapore, subsidies have lowered EV costs by up to S$40,000 ($30,500), leading to a surge in EV adoption. One in three new cars sold in the city-state during the first half of 2024 was electric.

“The incentives for new energy industries, such as EVs, operate similarly to other sectors, but they often offer more compelling benefits,” says Michael Ignatiadis, Head of Manufacturing Strategy, Asia Pacific, JLL. “Markets with incentives are particularly appealing for manufacturers, especially during the initial stages of investment.”

Thailand’s measures are part of its ambitious goal of having 30% of domestically produced vehicles be zero-emission by 2030. The country has already drawn $1.44 billion in manufacturing investment from Chinese auto giants like BYD and Great Wall Motor.

In addition to luring manufacturers, the incentives are also fostering the growth of a robust local EV ecosystem, according to Ignatiadis.

“To qualify for these incentives, a Made-in-Thailand product must source at least 40% of its materials and components locally,” Ignatiadis says. “This requirement not only supports local industries but also helps manufacturers decouple from China and avoid tariffs.”