Electric vehicle (EV) discussions remain heated as the rising global fuel costs directly hit the Philippines.
Over a month ago, an official of the Electric Vehicle Association of the Philippines (EVAP) urged the government to extend zero tariffs on imported EVs through 2040 to sustain industry growth and adoption. However, as EV adoption accelerates, a bigger question remains for the Philippines: will we settle for being just a passive consumer market, or will we strive to lead as a regional industrial power?
Executive Order 12 issued in 2023 temporarily reduced the most-favored nation import duty rate to zero percent on specific electric vehicles, parts and components. In 2024, the tariff exemption was expanded to include e-motorcycles, e-bicycles, nickel metal hydride accumulator batteries, e-tricycles, hybrid electric vehicles and plug-in hybrid electric vehicle jeepneys or buses.
The move drove rapid market expansion as cheaper foreign imports filled local showrooms.
A recent report from the Chamber of Automotive Manufacturers of the Philippines (CAMPI) revealed that demand for electrified vehicles (xEVs) remained strong by the end of September, with sales more than doubling to over 50,000 units while sales of gas-powered vehicles continued to decline.
Sales of xEVs expanded by 163 percent to 54,372 units from January to September this year compared with 20,676 units in the same period last year. Of the total xEVs sold, hybrid electric vehicles (HEVs) emerged as the best sellers, with sales amounting to 27,694 units, or up by 69 percent from 16,349 units last year. Battery electric vehicles (BEVs) ranked second with sales growing by 337 percent to 16,006 units in the nine-month period from 3,657 units last year.
The same report showed that plug-in HEVs registered the highest growth rate of 1,492 percent, with sales increasing to 10,672 units from just 670 units last year.
A previous CAMPI report showed the swift growth of brands like Jetour, VinFast, Jaecoo, Geely, MG, Ford, Dongfeng and Omoda.
Meanwhile, BYD Cars Philippines reported a January to August 2026 sales of 28,399 units, a 99 percent increase year-on-year and already exceeding the full-year 2025 sales of 26,122 units. Much of the growth was powered by BYD’s plug-in hybrid technology, with its DM-i vehicles posting a 95 percent year-on-year increase in sales. Its fully electric lineup also saw triple-digit growth, with BEV sales up 115 percent compared to the same period last year.
Although Fitch Solutions projects overall auto sales to drop 8.7 percent from 2025 (to 423,750 units), CAMPI reports July EV sales increased 161.8 percent percent year-over-year, further highlighting rapid electrification driven overwhelmingly by imports.
The Middle East conflict and volatile oil prices that started early this year continue to create a huge impact on the Philippines, triggering energy security concerns and fuel-cost awareness. It also raised the question of how quickly EV adoption can grow and how much demand can be localized. Prolonged reliance on tariff-free imported completely built-up units risks undercutting the domestic industry by driving consumption without building local manufacturing capacity, supply chains or retained economic value.
This is crucial for a country facing a persistent trade deficit, where importing vehicles instead of producing them, leaks value offshore.
Electrification offers the Philippines a chance to leverage expanding demand to build local production, create jobs, strengthen supply chains and improve its trade balance.
Beyond trade deficits, rising EV imports also threaten government revenues, with double-digit market share growth translating to billions in lost taxes under current zero-tariff policies. While these arrangements make EVs accessible, they highlight the need for the country to capture more long-term economic value from the transition.
Across ASEAN, the direction is shifting from pure import incentives toward capturing local manufacturing and supply-chain value, as seen in Malaysia, Thailand and Indonesia.
The Philippines is doing the same. To support local industry, the President signed Executive Order 121, which established the EV Incentive Strategy (EVIS) Program to provide fiscal incentives for manufacturing EVs and components.
Under EO 121, qualified manufacturers can receive Fixed Investment Support covering up to 40 percent of capital expenditures for battery electric vehicles and 30 percent for hybrids.
This vital step requires broader measures to offset competitive pressure from imports. Local manufacturers investing long-term must not be structurally disadvantaged against companies importing fully built units that enjoy preferential tariffs without building local capacity, jobs or supply chains.
As the Philippines plans its next EV strategy phase, extending tariff relief to sustain consumer adoption must be weighed against the opportunity cost: the potential factory, parts and technology investments gained by tying support directly to local production.
The important question is whether the business environment gives manufacturers — regardless of origin — a compelling reason to invest, produce and build supply chains in the Philippines.
It’s crucial to balance market access with domestic manufacturing capability rather than simply copying other nations’ policies. While cheaper imported EVs accelerate immediate consumer adoption, locally produced vehicles generate long-term value through jobs, supply chains, technology, capital investments and potential exports.
Furthermore, sustainable growth requires prioritizing production over consumption. Anchoring incentives on local manufacturing via EO 121 aligns public funds with job creation, supply chain integration and economic security, while a balanced tariff structure on imports can fund EVIS incentives and ensure the EV boom drives broader economic development.
Electrification offers a chance to rebuild the Philippine automotive base, far beyond merely filling roads with imported EVs. The true priority is capturing the value generated by this transition locally. With the regional EV market still forming and investment decisions underway, current policies will determine whether the Philippines remains an import destination or becomes a regional production hub. Clean, accessible transport must not undermine national industrial growth and electrification should strengthen domestic manufacturing rather than deepen import reliance.
Ultimately, to become a regional player, the government must foster a predictable environment for local production and parts manufacturing. The time to shift from importing the future to building it is now.
For comments, e-mail at maryannreyesphilstar@gmail.com.