The Department of Trade and Industry (DTI) expressed its qualms on the possible inclusion of hybrid electric vehicles (EV) in the current reduced tariffs policy of the government, saying it goes against the agency's current objectives to cultivate a pure EV ecosystem in the country.

"We reduced the tariff for pure EVs. The objective is we have a critical mass of EVs to make setting up charging stations a feasible operation. If hybrid EVs come in, it will not contribute to the attainment of that objective since hybrid does not need charging stations," said DTI Secretary Alfredo Pascual in a media briefing on March 8.

He remarked that based on the agency's goals, zero tariffs on hybrid EVs "is not justifiable," emphasizing the need to increase the population of pure EVs as the nation undergoes a green transition.

Pascual noted that, eventually, they will also cater to hybrid EVs when the market demand arises, noting that majority of consumers who purchase hybrid EVs are only in the upper class of society.

The DTI had committed to the 2022 decision of the NEDA Board to implement the temporary reduction of the most-favored nation (MFN) tariffs for imported EVs, along with their parts and components, for a period of five years.  

Trade Undersecretary and Board of Investments (BOI) Managing Head Ceferino Rodolfo said that they were in favor of the policy to "create the demand to build the market" and make way for "sufficient economies of scale for EVs to be assembled here."

The MFN tariff rates are subject to review after one year from the implementation of Executive Order (EO) No. 12, signed by Executive Secretary Lucas Bersamin on Jan. 13, 2023, which enforced the tariff reduction.

A part of the review, which is still ongoing, is to determine whether hybrid and two-wheel EVs may be included under the reduced MFN tariff incentive.

"It's important to build sufficient level of market demand to justify the assembly. For hybrid, we are quite far behind when it comes to supply chain for internal combustion engine (ICE) vehicles, especially when you compare it to the EVs. We really would like to focus on the pure EVs," explained Rodolfo.

He also noted that hybrid EVs already have the advantage of a 50 percent reduction in excise tax.

Hybrid EV imports mostly come from Japan, Thailand, and Indonesia, with Japan pushing the most for these vehicles.

"We are open to discussing this in the context of a Philippines-Japan negotiation," said Rodolfo.