Govt's e85 incentives 'useless', say auto firms

Ford, Chevrolet and Volvo said at a roundtable discussion last week that while the companies fully supported Thailand's decision to promote E85, the incentives were not suitable for firms interested in producing or importing E85-capable vehicles.

They are hoping the government will reconsider and make a new statement that will be more favourable to the production of E85-capable vehicles in Thailand.

The Cabinet said that excise tax for E85-capable vehicles would be decreased to 25 per cent, 30 per cent and 35 per cent for engines of 2,000cc, 2,001-2,500cc and greater than 2,501cc respectively.

Another incentive is a tax waiver for all E85 auto parts for a limited period of three years.

Mitr Phol Sugar, one of the largest producers of ethanol in Thailand, has said the ideal excise tax should be Bt0.55 if it were to really attract users.

"The excise tax has been decreased only to 25 per cent [for vehicles with an engine size of less than 2,000cc]. This is similar to that of E20 vehicles. Why is it that the government has given no better incentives for E85-capable vehicles? If consumers are to opt to buy an E85 vehicle, then there needs to be a reason like lower pricing for them to turn to it," said Khanchit Chaisupho, director of Asean public policy of General Motors Thailand.

Paul Stokes, president of Volvo Cars Thailand, said the zero-tax privilege for E85 completely built-up (CBU) parts was quite useless as the monetary benefit would be almost negligible.

"Besides, this would mean that we would have to ship the parts of the engine separately, which only adds to costs. Also the three-year limited time period would not make it worth it. Even if we were to consider it, it will take time before we can even implement this into our strategy," he added.

Liam Benham, Ford Thailand's vice president of governmental affairs for Asia-Pacific and Africa, said Thailand needed to take advantage of its position and promote biofuels.

"But the right incentive has to exist for auto companies to invest in producing cars here. The current incentives are not sufficient and we are hoping that the government will come up with something more attractive," he said. 

The government has plans to introduce E85 at fuel stations by the end of this year. This seems unlikely as there are no manufacturers in Thailand of E85-capable vehicles.

Volvo is the first company to import the C30 E85, which runs on any mixture of ethanol from 0-85.