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Philippines EV sales could reach 45% by 2035 under policy support
bworldonline.com, 26 May '26Headlines 26 May '26
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Electric vehicles (EVs) could account for nearly half of all car sales in the Philippines by 2035 if the government sustains incentives and follows through on planned policies, according to the International Energy Agency (IEA), indicating a potential structural shift in the country's automotive and energy sectors despite ongoing affordability constraints.
In its report, the IEA said EVs could capture around 45% of car sales in the Philippines by 2035 under its Stated Policies Scenario (STEPS), compared with an estimated 10% market share in 2025. Under the Current Policies Scenario (CPS), which reflects only measures already in place, EVs are projected to reach around 15% of sales by 2035.
The STEPS scenario assumes that governments fully implement announced energy and transport policies. The IEA noted that continued reliance on import duty and excise tax exemptions supports adoption in the near term in the Philippines.
Under the CPS, affordability constraints continue to limit broader adoption. However, under STEPS, electric cars could reach about 45% of sales by 2035.
EV adoption in the Philippines in 2025 was supported by excise tax relief and import duty exemptions for electric vehicles. Under existing revenue rules, purely battery EVs are exempt from excise tax on automobiles, while hybrid vehicles are subject to 50% of the applicable excise tax.
To accelerate adoption and attract investment, the government is implementing the Electric Vehicle Incentive Strategy, designed to support domestic production of EVs, batteries, components, charging infrastructure and testing facilities. The strategy complements broader efforts to expand the industry.
Since the enactment of the Electric Vehicle Industry Development Act in 2022, the Philippines has introduced EV adoption measures, including requirements for higher EV shares in corporate and government fleets. Under the Comprehensive Roadmap for the Electric Vehicle Industry, the country targets a 10% EV fleet share by 2040 under a business-as-usual scenario and at least 50% under a clean energy scenario.
According to industry data, electrified vehicles (xEVs) accounted for 12% of the Philippine market in 2025, up from 5.5% in 2024.
Patrick T. Aquino, director of the Department of Energy's Energy Utilisation Management Bureau, said EV sales are expected to grow by double digits this year. He added that higher fuel prices linked to developments in the Middle East are likely to support EV demand as consumers shift away from conventional fuel-powered vehicles. Diesel prices in the Philippines reportedly reached as high as PHP 170 (US$ 3) per litre during periods of geopolitical tension.
The IEA stated that EV adoption is also increasing across Southeast Asia, where sales more than doubled last year. Nearly one in five cars sold in the region is now electric, although growth remains uneven.
Vietnam, Indonesia and Thailand have led regional adoption, supported by policy frameworks, domestic manufacturing and import conditions, particularly from China. Malaysia and the Philippines continue to lag behind these markets despite recent growth.
Globally, the IEA expects EVs to account for around 28% of car sales this year, or nearly 30% of all cars sold worldwide. The organisation attributed this expansion to lower battery costs and policy responses to global energy market volatility.
IEA Executive Director Fatih Birol said electric car sales have increased in close to 100 countries, describing the trend as a shift for automotive markets and the energy system. He added that declining battery prices and energy market pressures are expected to support further EV adoption.
In Southeast Asia, several countries are scaling back incentives as tariff exemptions expire. The Philippines remains an exception, with import duty exemptions expected to remain in place through 2028 under current policy settings.
Earlier, the Chamber of Automotive Manufacturers Inc. (CAMPI) of the Philippines indicated that sales of electrified vehicles could continue rising this year amid changing consumer preferences and market conditions.
In its report, the IEA said EVs could capture around 45% of car sales in the Philippines by 2035 under its Stated Policies Scenario (STEPS), compared with an estimated 10% market share in 2025. Under the Current Policies Scenario (CPS), which reflects only measures already in place, EVs are projected to reach around 15% of sales by 2035.
The STEPS scenario assumes that governments fully implement announced energy and transport policies. The IEA noted that continued reliance on import duty and excise tax exemptions supports adoption in the near term in the Philippines.
Under the CPS, affordability constraints continue to limit broader adoption. However, under STEPS, electric cars could reach about 45% of sales by 2035.
EV adoption in the Philippines in 2025 was supported by excise tax relief and import duty exemptions for electric vehicles. Under existing revenue rules, purely battery EVs are exempt from excise tax on automobiles, while hybrid vehicles are subject to 50% of the applicable excise tax.
To accelerate adoption and attract investment, the government is implementing the Electric Vehicle Incentive Strategy, designed to support domestic production of EVs, batteries, components, charging infrastructure and testing facilities. The strategy complements broader efforts to expand the industry.
Since the enactment of the Electric Vehicle Industry Development Act in 2022, the Philippines has introduced EV adoption measures, including requirements for higher EV shares in corporate and government fleets. Under the Comprehensive Roadmap for the Electric Vehicle Industry, the country targets a 10% EV fleet share by 2040 under a business-as-usual scenario and at least 50% under a clean energy scenario.
According to industry data, electrified vehicles (xEVs) accounted for 12% of the Philippine market in 2025, up from 5.5% in 2024.
Patrick T. Aquino, director of the Department of Energy's Energy Utilisation Management Bureau, said EV sales are expected to grow by double digits this year. He added that higher fuel prices linked to developments in the Middle East are likely to support EV demand as consumers shift away from conventional fuel-powered vehicles. Diesel prices in the Philippines reportedly reached as high as PHP 170 (US$ 3) per litre during periods of geopolitical tension.
The IEA stated that EV adoption is also increasing across Southeast Asia, where sales more than doubled last year. Nearly one in five cars sold in the region is now electric, although growth remains uneven.
Vietnam, Indonesia and Thailand have led regional adoption, supported by policy frameworks, domestic manufacturing and import conditions, particularly from China. Malaysia and the Philippines continue to lag behind these markets despite recent growth.
Globally, the IEA expects EVs to account for around 28% of car sales this year, or nearly 30% of all cars sold worldwide. The organisation attributed this expansion to lower battery costs and policy responses to global energy market volatility.
IEA Executive Director Fatih Birol said electric car sales have increased in close to 100 countries, describing the trend as a shift for automotive markets and the energy system. He added that declining battery prices and energy market pressures are expected to support further EV adoption.
In Southeast Asia, several countries are scaling back incentives as tariff exemptions expire. The Philippines remains an exception, with import duty exemptions expected to remain in place through 2028 under current policy settings.
Earlier, the Chamber of Automotive Manufacturers Inc. (CAMPI) of the Philippines indicated that sales of electrified vehicles could continue rising this year amid changing consumer preferences and market conditions.