Laos will cut registration and service fees for electric vehicles (EV) by 30 per cent while raising charges for fuel-powered cars by the same amount, under emergency measures aimed at reducing fuel consumption during a worsening energy crunch.
The directive also requires transport companies to ensure electric vehicles account for at least 10 per cent of their fleets by the end of 2026 and calls for import procedures for EVs to be simplified and made less costly, according to a statement from the Lao Prime Minister’s office on Friday.
Government agencies have been ordered to halt purchases of new fuel-powered vehicles for administrative use unless strictly necessary, while authorities in the capital Vientiane have been instructed to extend the bus rapid transit (BRT) network to the railway station and airport.
The measures form part of Laos’ most significant response yet to an energy crisis that has rattled the landlocked Southeast Asian nation since late February, when turmoil in the Middle East squeezed global fuel supplies.
Between 4 March and 10 March alone, diesel prices surged nearly 50 per cent, jumping from LAK21,930 (US$1.03) to LAK32,860 (US$1.53) per litre. Special gasoline recorded the second-largest increase globally during the same period, according to price tracker Global Petrol Prices.
A modest reduction announced on 13 March brought diesel down to LAK31,560 (US$1.47) per litre, but prices remain far above pre-crisis levels.
The latest order also instructs ministries to cut travel to provincial areas, replace in-person meetings with remote alternatives wherever possible, and introduce rotating work shifts to reduce daily commuting.
The country imports more than 97 per cent of its petroleum products from neighbouring Thailand, leaving it highly exposed to supply disruptions.
The risks became clear when Thailand briefly suspended fuel exports after Iran closed the Strait of Hormuz in late February, triggering panic buying that emptied petrol stations across Vientiane within hours.
Thailand later granted Laos an exemption, allowing a 12-million-litre shipment to ease immediate shortages, but the episode exposed how little buffer the country has against external shocks.
Authorities have also moved to tighten oversight of the domestic fuel market. On 13 March, the Ministry of Industry and Commerce ordered nationwide inspections of fuel depots and petrol stations, directing officials to check supply levels, review delivery records dating back to 1 February, and take action against operators found hoarding or manipulating supply.
EV policy push
Laos has been gradually promoting EVs as part of efforts to reduce its heavy dependence on imported fuel.
Under existing policies, EVs already benefit from several incentives. They face zero import tariffs and a preferential excise tax of about 3 per cent, far lower than taxes applied to many conventional vehicles.
EVs also receive roughly a 30 per cent reduction in annual road tax compared with petrol vehicles of similar size, while the standard value-added tax of 10 per cent still applies.
The government has set a long-term goal for EVs to make up more than 30 per cent of vehicles on the road by 2030, according to official policy plans.
Demand has begun to grow from a low base. Laos recorded more than 4,600 EV sales in 2023, including both cars and electric motorbikes, as lower operating costs and government incentives encourage adoption.
Still, charging infrastructure remains limited and the upfront cost of EVs remains high for many consumers, slowing wider uptake.
