EV incentives sharpen competition between imports and local production

From AB Capital's The Opening Bell: Three Moves

Event

BYD backed extending zero EV import tariffs through 2040, beyond their scheduled 2028 expiry, while Mitsubishi indicated its planned P7 billion hybrid manufacturing investment could increase under EVIS. Mitsubishi is also considering RACE incentives for conventional vehicles, with investment commitments still dependent on government policy and implementing rules.

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We think the emerging policy trade-off deserves attention. Extending duty-free imports would preserve BYD's pricing competitiveness, while EVIS aims to attract domestic manufacturing investment. The challenge is ensuring production incentives remain sufficiently attractive as imported EVs gain scale, particularly given the Philippines' relatively small automotive market.

Catalyst

Finalization of EVIS guidelines and the proposed tariff extension will shape investment decisions. Illustratively, reinstating a 5% duty on a vehicle with a P1.5 million customs value would add P75,000 before downstream taxes. Php depreciation and stronger competition from established automakers remain additional risks to EV affordability and margins.

Action

We see AC benefiting from BYD's continued market penetration, with August YTD sales of 28,399 units already exceeding full-year 2025. However, the weaker Php could pressure import costs and margins. For GTCAP, Toyota's established hybrid franchise provides exposure to electrification, although intensifying competition warrants closer monitoring of market share and profitability.

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