Thailand approved a drawn down subsidy package for its booming electric vehicle industry on Wednesday, as the top regional auto hub looks to continue its strong EV sales momentum while balancing budgetary support, a government official said.

The new package, cleared by the National Electric Vehicle Policy Committee, will offer a subsidy of up to 100,000 baht ($2,764) per EV car, said Narit Therdsteerasukdi, secretary-general of the Thailand Board of Investment.

Starting from next year and ending in 2027, the scheme will also include lower import duty and excise taxes, he said.

EVs have steadily gained traction in Thailand, spurred by a government subsidy that currently stands at up to 150,000 baht per car. The country accounted for around half of all EV sales in Southeast Asia in the second quarter.

"In the past two to three years after the government's support, the rate of EV use in Thailand has greatly increased," he told reporters.

"So support from the government will gradually reduce in line with the situation, in order not to cause too much of a burden on the budget."

The new package will cost about 3 billion baht, according to an estimate by research firm BMI.

By 2030, Thailand aims to convert 30 percent of its annual production of 2.5 million vehicles into EVs, according to a government plan.

Tax cuts and subsidies rolled out by Thailand have already drawn in a raft of Chinese carmakers, including BYD and Great Wall Motor, which have committed to invest $1.44 billion in new production facilities in Southeast Asia's second-largest economy.

For decades, the world's 10th largest auto manufacturing economy has been dominated by Japanese firms such as Toyota Motor and Honda Motor, which use Thailand as a major export base.

Beyond manufacturing, Thailand will provide incentives and tax breaks for carmakers setting up EV research and development centers.

"The government sees a need to continue promoting the EV industry and maintain the EV growth momentum in order to make Thailand the number one production base in the region," Narit Therdsteerasukdi said.

Reuters