auto huawei
A BYD electric car equipped with Huawei's HiCar system in Shanghai, China. Another Chinese tech company Xiaomi is also planning to build its own car. Image Credit: AFP

Manila: A move to cut to zero the import tariff rate for electric vehicles (EV) and lowering to 1% tariffs for EV component imports for the next five years is starting to bear fruit.

The Philippines has recently unleashed a raft of measures to woo investments in renewables, with five Philippine cities leading a $3.8-billion electric vehicle drive.

A number of Chinese EV makers have reportedly registered with local authorities to build assembly plants in the Philippines’ so-called “economic zones”, most of them in provinces near Manila, potentially creating a new industry.

Executive order

Recently, President Ferdinand Marcos Jr. signed Executive Order (EO) 12 reducing the tariff rates on electric vehicles to zero for a period of five years.

The order also lowers tariffs for EV parts and components to 1 per cent during the same period. The move could fuel demand for EVs while creating thousands of jobs.

EV assembly plants initially valued at about $500 million are now in the works with BYD, China’s largest EV manufacturer, pursuing a plan to start assembling EVs in the country.

BYD is one of three EV brands currently seeking approval from Fiscal Incentives Review Board (FIRB), the inter-agency body with authority to grant tax incentives to businesses.

Zero import tariff

President Marcos Jr’s order, signed on January 13, 2023, reduced the Most-Favored Nation (MFN) tariff rates on completely built up units (CBUs) of certain EVs, including:

  • Passenger cars
  • Buses
  • Minibuses
  • Vans
  • Trucks
  • Motorcycles
  • Tricycles
  • Scooters
  • Bicycles

The order, however, does not apply to hybrid-type EVs.

1% tariff rates for EV parts, components

The president signed the order following the endorsement by the National Economic and Development Authority (NEDA) Board on Nov. 24, 2022 for the temporary reduction of the Most-Favored Nation (MFN) tariff rates on certain EVs and their components. Major markets are now embracing battery-powered vehicles, in part due to government incentives.

In the US, consumers have started the shift as EV sales surged 70.7%, accounting for one of every 20 new cars sold — doubling market share of total new car sales in just a year. In China, 5.67 million EVs and plug-ins were sold in 2022, the China Passenger Car Association said January 10, as state incentives wooed buyers.

Act 11697
• EO 12 cites Republic Act 11697, or the Electric Vehicle Industry Development Act, (EVIDA) which aims to help usher in the country’s energy independence.

• RA No. 11697 provides an ecosytem that permits the development of electric vehicles, including options for micro-mobility.

• The transportation sector is one of the largest sources of air pollution and energy-related greenhouse gas emissions in the country at 34 percent, with road transportation accounting for 80 percent of those emissions.

Economic zone

BYD, based in Guangdong Province’s Shenzhen City, is understood to be prospecting for a place for its assembly plant possibly in one of the industrial zones administered by the Philippine Economic Zone Authority (PEZA), which hosts thousands of companies.

In 2022, BYD sold more than 1.85 million plug-in electric cars, more than tripling its 2021 output of of 593,745, and thus becoming the world's largest manufacturer of EVs.

Towards the end of 2022, BYD officials visited the Philippines to express their interest in building an EV assembly plant.

Tesla is in the second spot, having produced over 1.3 million units across its “gigafactories,” has recently opened shop in Thailand, and is reportedly planning to build a gigafactory in Indonesia.

Charging stations

Three other Chinese EV firms with local partners have received approval from the Philippine Board of Investments (BOI) in 2022. These companies intend to build 1,000 charge stations, 10,000 passenger cars for lease, and 10,000 vehicles for the Transportation Network Vehicle Service (TNVS).

In January, the PEZA announced big-ticket projects for 2023 — including 13 US tech companies relocating from China, two Chinese steel projects and power generation firms.