By Erika Mae P. Sinaking, Reporter

President Ferdinand R. Marcos, Jr. has approved a new incentive program designed to attract investment in the domestic manufacturing of electric vehicles (EVs) and their components, as the Philippines seeks to strengthen its position in the regional EV supply chain.

Executive Order (EO) No. 121, announced by Malacañang on Thursday, aims to close the cost gap between electric and conventional vehicles, establish domestic production targets over the next eight years, and encourage major automakers to set up operations in the country.

The Electric Vehicle Incentive Strategy (EVIS) program provides what the government describes as "time-bound, targeted, performance-based and transparent" fiscal incentives to manufacturers of battery electric and hybrid passenger cars, commercial vehicles, as well as their parts and components.

"There is a need to implement the EVIS program to enable the country's EV industry to seize market opportunities arising from the global transition to electric mobility, deepen its participation in the regional supply chain, strengthen the country's manufacturing base, and contribute to sustainable economic growth and the attainment of the State's energy security and environmental objectives," the order stated.

The program comes as Southeast Asian neighbors have moved aggressively to capture EV manufacturing investment. Thailand, the region's largest auto production hub, and Indonesia, which holds significant nickel reserves critical for EV batteries, have both rolled out incentive packages targeting global automakers. The Philippines has lagged in automotive manufacturing scale despite earlier efforts under the Comprehensive Automotive Resurgence Strategy (CARS) Program, which allocated P27 billion to incentivize domestic vehicle production.

Palace Press Officer Clarissa A. Castro said the program will encourage major automakers to establish EV manufacturing facilities in the Philippines.

"When they invest and manufacture vehicles here, more jobs will be created for Filipinos, from engineers and technicians to factory workers, logistics providers and local suppliers," she told reporters in Filipino.

Mitsubishi Commits P7 Billion

Mitsubishi Motors Philippines Corp. (MMPC) announced on Thursday that it will participate in the EVIS program through a P7-billion investment by its parent company to produce hybrid electric vehicles locally.

"Backed by Mitsubishi Motors Corporation's P7-billion investment commitment, we are ready to support the government's vision through the local production of hybrid electric vehicles, further enhancing the country's manufacturing capabilities and competitiveness," MMPC Chairman Noriaki Hirakata said in a statement.

MMPC said it will support the expansion of domestic EV manufacturing capabilities and the development of the automotive supply chain in the Philippines.

"Through this investment, we look forward to creating greater value for the Philippine economy, supporting the country's sustainability objectives, generating opportunities across the automotive ecosystem, and contributing to the continued growth of local vehicle manufacturing," Mr. Hirakata added.

Mitsubishi's early commitment marks a notable early win for the program, as the Philippines competes with neighboring countries that have already attracted EV production commitments from manufacturers such as BYD, Hyundai, and Toyota across the region.

Juan Paolo E. Colet, Managing Director at China Bank Capital Corp., described the new order as a positive step toward promoting EV manufacturing in the country.

"While fiscal incentives are important, the government must also address other factors that influence investment decisions across the automotive value chain. These include competitive energy costs, the availability of high-quality industrial estates, access to skilled labor, efficient port and transport infrastructure, and a more supportive regulatory environment," he told BusinessWorld via Viber.

Incentive Structure

Qualified manufacturers may register up to two EV models under the EVIS program. To be eligible, companies must undertake new investments, commit at least P5 billion in capital, meet production targets, and introduce locally manufactured EV models within three years of registration.

Registered participants may receive fixed investment support (FIS) equivalent to an applicable percentage of total capital expenditure used for tooling, equipment, and research and development costs to manufacture the enrolled EV model.

For the domestic manufacture or assembly of EVs as well as parts and components, the FIS is set at 40% of capital expenditure for battery EVs and 30% for hybrid EVs, plug-in hybrid EVs, and fuel cell EVs.

Participants may also receive a production volume incentive (PVI) of up to 12% of the ex-factory unit price, capped at P200,000 per unit for domestically manufactured or assembled EVs. This incentive requires a minimum planned production of 10,000 EV units.

Participants will be entitled to both the FIS and PVI for a maximum of 10 years from the start of production of the enrolled EV models.

Under the executive order, total fiscal support for the EVIS program is capped at P60 billion, with up to P15 billion allocated for each enrolled EV model. Rather than receiving cash grants, registered participants will be issued tax payment certificates.

The P60 billion ceiling more than doubles the budget of the earlier CARS Program and signals an escalated level of state commitment to building a domestic EV industry from a relatively small base.

The Department of Trade and Industry, through the Board of Investments, will oversee implementation of the EVIS program in coordination with the Fiscal Incentives Review Board.

Companies that fail to introduce locally manufactured EV models or components within three years of registration may face cancellation of their registration, monetary fines, or the refund of fiscal incentives received.