(Bloomberg) -- Thailand will allocate 34 billion baht ($970 million) through to 2027 to fund its ambition of becoming a major production hub for electric vehicles, renewing a flagship incentive program in the Southeast Asian nation. 

Foreign EV makers will be eligible to receive up to 40% cuts on import duties and a reduced excise tax rate of 2% for their completely-built electric cars brought into Thailand in 2024 and 2025, according to Narit Therdsteerasukdi, secretary-general of the Board of Investment. In return, EV makers will have to manufacture EVs locally in Thailand by 2027. 

“The EV 3.5 package will bolster more investments in Thailand’s EV industry and facilitate traditional players’ transition to EV,” he said in reference to the new scheme. “The package will also attract new EV makers to set up manufacturing bases in Thailand.” 

The new package renews the government’s EV ambitions to help Southeast Asia’s second-biggest economy achieve carbon neutrality by 2050. A longstanding auto manufacturing hub known as “Detroit of Asia,” Thailand wants to make 30% of its car output electric by 2030 to retain its status as a regional powerhouse in the age of EVs. 

Since the first phase launched in 2022, Thailand has attracted a slew of Chinese EV makers such as BYD Co., Great Wall Motor Co., SAIC Motor and Changan Automobile. These Chinese players are fast challenging the dominance of legacy Japanese and western automakers, which have long been making and exporting internal combustion engine cars from Thailand.

The new budget was approved in a cabinet meeting on Tuesday. The so-called EV 3.5 package will begin on Jan. 2 after the current set of incentives expires at the end of this year. While the benefits offered are lower than the previous scheme, the government expects the new program to benefit 830,000 EVs in the next four years, including 454,000 electric passenger cars, according to Narit. 

The government approved an additional 7.1 billion baht budget to fund the current buyers incentive program, deputy government spokeswoman Rudklao Suwankiri told reporters. 

The extra allocation will support a rush of purchases during the year-end period, she said. Local EV buyers will be offered subsidies of up to 100,000 baht ($2,858) per vehicle from next year to 2025, lower than the current subsidy of 150,000 baht that expires on Dec. 31.

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