In 2025, Cambodia introduced a series of policies around the automotive industry, covering multiple dimensions such as the promotion of new energy vehicles, industrial transformation, tariff adjustments, improvement of environmental protection regulations and regional cooperation, aiming to promote the sustainable development of the automotive market and economic diversification.

Goals and plans

According to the “Electric Vehicle Development Policy (2024-2030)”, Cambodia plans to increase the number of electric vehicles to 30,000 by 2030 (including 25,000 household electric vehicles and 5,000 commercial electric vehicles), and increase the number of electric motorcycles and electric tuk-tuks to 720,000 and 20,000 respectively. The long-term goal is to achieve carbon neutrality by 2050, when electric motorcycles will account for 70% of the total number of motorcycles, and electric vehicles and electric buses will account for 40% of similar transportation vehicles.

Policy support: The government encourages the popularization of electric vehicles by reducing import tariffs (the import tariff on electric vehicles has been reduced from 63% to 50%), providing car purchase loan discounts, and building a charging station network. For example, BYD’s passenger car factory in Sihanoukville, which has invested US$32 million, will be put into production at the end of 2025, with an initial annual production capacity of 10,000 vehicles, and is expected to drive local employment and technological upgrading.

Industrial Chain Layout

Cambodia is transforming from automobile assembly (CKD) to localized production of parts, encouraging companies to invest in the manufacturing of core components such as batteries and motors. For example, Ford’s new assembly plant in Pursat Province has adopted the IKD (non-complete knock-down) model, and some parts are purchased locally. The government also plans to introduce special policies to attract auto parts companies and reduce dependence on imports.

Tariff concessions for new energy vehicles

The import tariff on electric vehicles has been reduced to 50%, and some models can enjoy tax exemption policies. For example, electric vehicles of brands such as BYD and Zeekr have seen rapid growth in sales in the Cambodian market, with BYD’s order volume increasing by 521% year-on-year in the first quarter of 2025.

Fuel vehicle and used vehicle policy

Fuel vehicle: The import tariff rate is between 0% and 35%, with an average rate of 15%, but large-displacement models may face higher rates. For example, fuel vehicles with a displacement of more than 2.5 liters are subject to a 35% tariff and a 10% VAT.

Used vehicles: The government plans to increase the import tax on used vehicles to promote local assembly, but the specific tax rate has not yet been determined. Currently, used cars account for 90% of Cambodia’s auto market, mainly from Japan and South Korea, and the age of the cars is generally less than 5 years.

Emission standards

Cambodia has not yet clearly implemented Euro V or Euro VI standards, but according to the Environmental Protection Law, all new and imported vehicles must pass an environmental impact assessment (EIA) and meet basic emission requirements. The government encourages the use of clean energy and plans to increase the proportion of clean energy power generation to 70% by 2030 to support the popularization of electric vehicles.

Traffic safety and regulation revision

Driver’s license deduction mechanism: From January 2025, drivers who accumulate 12 deduction points will have their licenses revoked. Violations include speeding, drunk driving, and not wearing seat belts.

Traffic law revision: The traffic law revision launched in 2024 involves 52 clauses, focusing on strengthening the protection of motorcycle riders (accounting for 75% of traffic accident deaths) and promoting pilot projects for autonomous driving and intelligent transportation systems.

Cooperation under the ASEAN framework

Cambodia actively participates in ASEAN automotive agreements (such as AFTA) to promote the liberalization of automotive parts trade in the region. For example, ASEAN plans to launch a policy framework for electric vehicle standardization in May 2025 to unify battery technology and charging facility specifications and enhance regional competitiveness.

Deepening China-Cambodia cooperation

Chinese automakers occupy an important position in the Cambodian market. Brands such as BYD, Hongqi, and Neta are accelerating the popularization of new energy vehicles through localized production and sales network expansion. For example, Neta Auto’s layout in the Thai and Indonesian markets provides Cambodia with experience for reference.

Infrastructure bottleneck

The delayed construction of charging piles and high electricity costs (about US$0.2/kWh) have restricted the popularization of electric vehicles. The government plans to add 200 MW of battery energy storage systems by 2030 and promote solar and wind power projects.

Technology and talent gap

The local automotive parts supply chain is weak and there is a shortage of high-end technical talents. The government improves the skills of the workforce through vocational training and STEM education (science, technology, engineering, mathematics), while attracting technology transfer from foreign-funded enterprises.

Market competition and policy risks

ASEAN countries such as Vietnam and Thailand have more advantages in the field of automobile manufacturing, and Cambodia needs to compete through tax incentives and industrial policies. In addition, policy implementation efficiency and corruption issues may affect foreign investment confidence.

Cambodia’s automotive policy in 2025 focuses on new energy transformation, promotes the popularization of electric vehicles through tariff preferences, industrial support and regional cooperation, and strengthens environmental protection and safety regulations to promote the upgrading of the automotive industry chain.

Despite infrastructure and technological challenges, these policies have brought new opportunities to the automotive industry, especially in the fields of electric vehicles and parts manufacturing. In the future, with the localization of production by companies such as BYD and the advancement of ASEAN standardization, Cambodia is expected to become an emerging hub for the Southeast Asian automotive industry.