The Automotive Industry and EVs

As of 2026-08-30 · Updated 2026-08-30 · Section: Economy, Industry & Business · 日本語版

2026 is the year the Philippines' automotive industry policy pivoted from "localizing gasoline-car production" to "localizing EV production." The January budget veto wiped out the CARS and RACE budgets, and in July EVIS (₱60 billion) was launched by executive order.

1. The big picture first

  The Philippines has a structure close to being the only ASEAN country that "imports its cars"

    About 70% of vehicles sold are imported (2015-2023 average, BOI)
    Domestic assembly is effectively limited to 2 companies (Toyota / Mitsubishi)
    Domestic parts-sourcing ratio: about 80% in 1997 → about 20% today (PPMA)

注 Statistics vary widely depending on which industry association is reporting. CAMPI-TMA (Toyota, Mitsubishi, and others) and AVID (an association of importer/distributors) keep separate tallies, and BYD is not part of CAMPI — it belongs to AVID. Whenever discussing "the Philippines' new vehicle sales figures," always check which association's data is being cited.

2. What is CARS (Comprehensive Automotive Resurgence Strategy)?

A program launched in 2015 under Executive Order No. 182 to support local production of passenger cars.

TMP has already met the 200,000-unit production condition for the Vios. CARS funds went toward equipment such as plastic injection-molding machines (bumpers, dashboards), roller-hemming robots, and A0 press lines.

RACE (Revitalizing the Automotive Industry for Competitiveness Enhancement)

• A ₱9 billion program designed by the DTI as the successor to CARS.
• Eased the production condition to 100,000 units, with support of up to ₱3 billion per company.
• Fiscal support for capital expenditure and fixed investment in equipment and tooling.
• Was to be implemented through a joint administrative order from the DTI, DOF, and DBM.

3. The 2026 budget veto — CARS and RACE cut out

Background

  5 January 2026
    President Marcos signs the FY2026 General Appropriations Act (₱6.793 trillion)
    At the same time, vetoes 7 of the 10 "unprogrammed appropriations" items,
      totaling ₱92.5 billion

    What was cut
      - CARS: ₱4.32 billion (unpaid arrearages owed to Toyota and Mitsubishi)
      - RACE: ₱250 million

注 The key detail is "unprogrammed appropriations." The Philippine budget distinguishes between programmed (regular funding) and unprogrammed (a conditional envelope that can only be spent if, for example, revenue exceeds targets) items, and CARS payments sat in the latter category. In other words, the structural weakness was already there from the start: automotive support was placed in a funding line whose execution was never guaranteed.

Industry backlash (January 2026)

The DBM, DTI, and DOF's explanation, and paying from "DPWH savings"

On 19 January 2026, the three agencies issued a joint statement titled "PBBM will not abandon the automotive industry."

How the payment mechanism works (important detail for practical purposes)

  (1) Use the "unpaid fiscal support" line item remaining under
      DTI-BOI in the FY2025 General Appropriations Act (GAA)

  (2) Any shortfall is covered by augmentation from DPWH's
      (Department of Public Works and Highways) verified 2025 savings

  (3) Execution requires an augmentation approval from the
      Office of the President

  (4) Cases where the TPC has not yet been issued but the
      conditions have been met will be handled by including them
      in the FY2027 National Expenditure Program (NEP)

注 The background to DPWH savings becoming the funding source is the 2025 flood-control corruption scandal. DPWH itself deleted roughly ₱252 billion worth of local flood-control projects from its FY2026 budget (September 2025), and unspent funds also remained from FY2025. This produces a fairly unusual structure, in which payments to the automotive industry are funded by money freed up by a scandal in an entirely different sector.

4. RACE's de facto end and the shift to EVIS

  January 2026    RACE's ₱250 million budget is wiped out by the veto
                   → DTI explains that "over ₱400 million in unpaid CARS
                   arrears takes priority," and RACE is shelved

  End of January   DTI: "Funding for RACE is still under discussion"
  2026

  April 2026      DTI Secretary Roque:
                   "Diretso nang EVIS. For now, wala nang RACE"
                   (Going straight to EVIS. For now, no more RACE)
                   → RACE's implementation plan is withdrawn

  June 2026        Secretary Roque again raises the possibility of
                   reviving RACE for the internal-combustion vehicles
                   MSMEs need → welcomed by the parts industry

  29 July 2026    Executive Order No. 121 (EO 121) launches EVIS

注 Reporting on whether "RACE is dead or alive" has been mixed. It is a fact that implementation was withdrawn in April 2026, but revival was discussed again in June, and as of August the program has not been formally reinstated. The accurate description at this point is "de facto ended, revival unconfirmed." Toyota is reportedly the strongest advocate for reviving RACE (to keep its internal-combustion domestic production going).

5. EVIS (Electric Vehicle Incentive Strategy)

Executive Order No. 121. Signed 29 July 2026, took effect 30 July. The largest automotive incentive package in Philippine history.

Implementation structure

• The BOI (Board of Investments) is the lead agency.
• A new Inter-Agency Committee on EV Industry Development (IAC-EV) has been created, with the DOF, DOE, DOTr, and DBM as members. It reviews registration applications, recommends registration certificates, and handles approval/revocation of incentives.
• The FIRB (Fiscal Incentives Review Board) sits above it. EVIS was approved under FIRB Resolution No. 009-26 on 18 May 2026.
• If applications exceed the available slots, the top 4 companies will be selected based on fiscal/economic impact and contribution to the domestic economy.

注 Implementing rules (IRR/implementing guidelines) are supposed to be issued within one month of the EO taking effect (i.e., around end-August). As of 24 August 2026, it could not be confirmed whether these had been published (unconfirmed). Mitsubishi, too, is reportedly waiting for the IRR to be registered before filing a formal application.

Expected EVIS participants

6. Mitsubishi Motors' 2028 local hybrid production

  6 April 2026   Mitsubishi Motors CEO Takao Kato meets President
                   Marcos at Malacañang Palace
                   → announces EVIS participation and plans for
                     local HEV production in the Philippines

If realized, this would be "the Philippines' first domestically produced hybrid vehicle." Mitsubishi executive (Chairman Noriaki Hirakata) has also suggested that if demand exceeds expectations, investment could exceed ₱7 billion.

7. The domestic market — who is selling what

2025 (an all-time high)

注 "500,000 units" is a target the industry has now missed two years running, in both 2024 and 2025. CAMPI's new chairman, Jose Maria Atienza, has expressed determination to reach it.

By brand (2025, CAMPI-TMA basis)

H1 2026 — internal-combustion sales plunge, EVs surge

The backdrop is the oil crisis of early 2026. Worsening Middle East tensions around the Strait of Hormuz sent prices soaring, with the Metro Manila average even in early June at ₱82.54/L for diesel and ₱85.88/L for unleaded gasoline (DOE/fuelprice.ph). Prices remain elevated even as of August 2026 (diesel at ₱85.50/L as of 17 August 2026, per GlobalPetrolPrices, versus ₱53.10/L a year earlier). This spike in fuel prices tilted consumer preference toward electrified vehicles across the board, and was also the direct trigger for the government fast-tracking EVIS.

注注 (Corrected in the 2026-08-25 cross-check pass. Source: GlobalPetrolPrices, "Philippines diesel prices," updated 17 August 2026 — ₱85.50/L, versus ₱53.10/L a year earlier / field article "Electricity and Power Rates" §4) The earlier draft's claim that "diesel had settled to around ₱56.70/L by August" was incorrect. That figure is close to pre-crisis (2025) levels — a textbook case of an old figure being mistaken for the current one. The field article "Electricity and Power Rates" §4 states that in the same period, "diesel was around ₱90.40/L as of 3 August 2026 (GlobalPetrolPrices)," and further notes an "18 August price hike of +₱2.49 for gasoline and +₱3.84 for diesel" and that "Energy Secretary Garin says prices won't return to the pre-war ₱50-60/L range even once the conflict ends." ₱56.70/L contradicts all of this. 注 The timing of the price peak is also inconsistent across our reference materials. This article's earlier draft said the peak came "around April," while "Electricity and Power Rates" §4 says "diesel hit ₱130-140/L in March, with Philstar reporting a peak of ₱170/L." Since this could not be confirmed against the primary source (DOE oil-price monitoring), this article has dropped the assertion that the peak came "around April."

The fuller picture including AVID (BYD)

注 BYD belongs to AVID, not CAMPI. CAMPI's published sales statistics therefore do not include BYD. Articles claiming "VinFast leads Philippine EV sales" reflect the CAMPI-only basis, not the market as a whole.

8. The parts industry (PPMA) and the structure of import dependence

The structural core of the issue

  - ASEAN's Common Effective Preferential Tariff (CEPT) scheme,
    in place since 1993, has pushed intra-regional tariffs to
    near zero
    → Manufacturers concentrated production in Thailand and
      Indonesia, and the Philippines became just a market

  - As domestic assembly shrinks, parts orders shrink with it
    → Parts makers become unprofitable → withdraw → domestic
      sourcing ratio falls further

  CARS was created to break this vicious cycle, RACE was its
   successor, and now EVIS is the next attempt

Toyota's domestic production (2025)

注 Honda ended four-wheel production in the Philippines in 2020, leaving Toyota and Mitsubishi as the only two effective passenger-car assemblers. The perception that "Japanese makers dominate" is a separate thing from the actual scarcity of production bases.

9. Taxation — what gets more expensive, and what stays cheap

The impact of pickup taxation (2025)

• The legal basis is CMEPA (Capital Markets Efficiency Promotion Act, Republic Act No. 12214), signed 29 May 2025, effective 1 July.
• A Ford Ranger Wildtrak 4x4 AT rose from ₱1.95 million to ₱2.34 million — a ₱390,000 increase (August 2025).
• The DOF projects roughly ₱30.06 billion in additional revenue by 2028.
• CAMPI cites this tax as one factor behind the market's weakness in the second half of 2025.

Tariffs (EO No. 12)

• Signed 13 January 2023. Cut EV vehicle tariffs from 5-30% to 0%, and parts tariffs to 1%, through 2028.
• Coverage was expanded in May 2024 to add electric two-, three-, and four-wheelers, e-jeepneys, e-buses, HEV/PHEV passenger cars and trucks, and various CKD categories (34 BEV-related tariff lines in total).
• The scheme expires in 2028. EVAP (Electric Vehicle Association of the Philippines) has stated it does not intend to seek an extension beyond 2028 (to protect domestic production).

10. The state of EV adoption — infrastructure and the EVIDA law

The EVIDA Law (Republic Act No. 11697, the Electric Vehicle Industry Development Act)

"Lapsed into law" on 15 April 2022 — it took effect through the passage of time rather than presidential signature.

注 There is no nationwide fixed quota for how many chargers a gas station must install. The DOE plans to scale requirements by station size (e.g., one charging point for stations with more than 4 fuel pumps), with allowances such as withholding permits for stations that lack space. Simplifying this to "all gas stations are required to have chargers" is inaccurate.

Charging infrastructure

Charging rates (2026, DOE)

注 DC fast-charging at ₱30.15/kWh is roughly double residential electricity rates (about ₱14.8/kWh at Meralco as of August 2026). The claim that "EVs cost less to run" holds mainly for home charging. Relying on public fast-charging significantly narrows that advantage.

CREVI (the comprehensive EV industry roadmap)

• Formulated by the DOE under the EVIDA Law, covering 2023-2040.
• Near-term (2023-2028) target: 2.45 million EVs (passenger cars, tricycles, motorcycles, and buses combined). Within the passenger-car breakdown: 415,000 HEVs, 69,000 PHEVs, 69,000 BEVs.
• A target for 50% of vehicles on the road to be EVs by 2040 (the DOE has raised the EVIDA law's 5% mandate to 10%, with 50% under a clean-energy scenario).
• Energy Secretary Sharon S. Garin frames electrification as a pillar of energy security (reducing dependence on imported oil).

注 Roughly 60% of the Philippines' power mix is coal (April 2025-March 2026). Switching to EVs will have only limited CO2 benefits as long as generation itself remains coal-dependent — a point also debated locally.

11. Motorcycles — actually dominant by volume

• MDPPA members include Honda, Kawasaki, Suzuki, Yamaha, and TVS.
• The "other" category, including tricycles and electric models, stays in the low thousands per month, meaning the electrified share of the two-wheeler market is very small.
• 注 Economists have noted that weak car sales alongside strong motorcycle sales likely reflects declining consumer purchasing power (2025).

12. A summary of easily misunderstood points

13. What Japanese companies and residents should watch for

  1) Mitsubishi's Santa Rosa expansion (2028 mass production) may
      drive demand around Laguna for parts, tooling, wiring,
      and engineers

  2) EVIS requires a minimum investment of ₱5 billion per
      company. For parts suppliers, "can we become a Tier-1
      supplier to an EVIS participant?" is the dividing line

  3) EO 12's zero EV tariff expires in 2028. Imported EVs have
      the advantage until then; after that, whoever has
      localized production gains the edge

  4) The delay in CARS payments has demonstrated, in practice,
      the country risk that "promised incentives can vanish in
      the budget process."
      The same doubt is now being directed at the ₱60 billion
      EVIS program (per BusinessMirror editorials and others)

日本語の詳細版: 分野「産業」「自動車産業とEV」（本サイト日本語版）。