The Philippines’s electric vehicle (EV) market is expected to keep growing in 2026 even as the broader car industry contracts, underscoring how fuel costs, government incentives and cheaper Chinese models are beginning to shift buyer behaviour in one of Southeast Asia’s more difficult markets for electrification.
BMI Country Risk and Industry Research forecasts electric vehicle sales in the Philippines to rise 11.2 per cent year-on-year in 2026, from 29,479 units to 32,776 units. Its definition of EVs includes battery electric vehicles and plug-in hybrids, but excludes conventional hybrids that cannot be charged externally.
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That growth is notable because BMI expects total vehicle sales in the country to fall 8.7 per cent to 423,750 units next year. As a result, EV penetration is projected to climb from 6.4 per cent in 2025 to 7.7 per cent in 2026.
The numbers point to a familiar pattern across Southeast Asia: EV adoption is rising, but not evenly. In wealthier urban centres, buyers are increasingly open to electrified vehicles, particularly as fuel prices climb and more models enter showrooms. Outside those areas, charging access, road conditions and affordability continue to slow the transition.
Fuel prices cut both ways
BMI said higher fuel prices linked to the US-Iran conflict are producing two opposing effects in the Philippine auto market. On one hand, they are weakening overall demand by raising transport and ownership costs. On the other, they make electrified vehicles more attractive to buyers who can still afford a new car.
“Consumers able to purchase a new vehicle have a stronger incentive to consider models that can reduce fuel expenditure. This will benefit BEVs, PHEVs and HEVs, particularly among higher-mileage drivers and urban consumers,” BMI said.
That matters in the Philippines, where traffic congestion, long commute times and frequent stop-start driving can make fuel spending a major concern for households and small businesses. For fleet operators, ride-hailing drivers and urban professionals, the economics of electrification can become more compelling when petrol prices are volatile.
Still, the shift is not a simple move from petrol cars to fully electric ones. BMI expects hybrids and plug-in hybrids to remain important because they offer lower fuel use without forcing drivers to depend fully on public charging networks. This is especially relevant in a market where many consumers do not have reliable access to home charging.
Chinese brands push prices lower
A broader model line-up is also helping the market. BMI pointed to brands such as BYD, Chery, MG, VinFast and Tesla as supporting the local battery EV segment through more competitive pricing and a wider choice of vehicles.
Chinese automakers are likely to be particularly important. BYD, MG, GAC Aion and Chery are bringing more affordable electric SUVs and crossovers into the market, which could help reduce the price gap between EVs and comparable internal combustion engine vehicles.
“We contend that the expansion of Chinese brands will be particularly important because it will reduce the price gap between EVs and comparable internal combustion engine vehicles while increasing consumer awareness of electrified technology,” BMI said.
This mirrors developments elsewhere in Southeast Asia. Chinese EV makers have moved aggressively into Thailand, Indonesia and Malaysia, often using price, financing and high-spec models to challenge Japanese incumbents. The Philippines has been slower to electrify at scale, but the entry of more Chinese brands could alter expectations among buyers who previously saw EVs as niche or luxury products.
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The popularity of SUVs, crossovers and pickup trucks adds another layer. These are important segments in the Philippine market, but electric versions tend to carry higher sticker prices and require larger batteries. More competitively priced Chinese models could therefore play a decisive role in pushing EVs beyond early adopters.
Policy helps, but charging remains the bottleneck
Government policy is another tailwind. Battery EVs are exempt from import tariffs and excise taxes until 2028, while hybrids and plug-in hybrids benefit from tariff exemptions and lower excise tax rates. These measures are narrowing the price gap with petrol and diesel vehicles.
The Electric Vehicle Industry Development Act also provides a policy framework for charging infrastructure, regulatory support and the use of EVs in public-sector fleets. It sets a target for EVs to make up at least 10 per cent of government vehicle fleets, a move that could create demand while making the technology more visible to the public.
But charging infrastructure remains the clearest obstacle. The Philippines currently has around 1,600 charging points, according to the Electric Vehicle Association of the Philippines. These include 781 alternating current chargers, 291 direct current chargers and 528 battery-swapping stations.
“Although the network is expanding, charging facilities remain concentrated in major urban areas,” BMI said.
That concentration limits the practicality of battery EV ownership for people without home charging and for drivers who travel between cities or through less-developed areas. The dominance of alternating current chargers also means charging can be slow, making plug-in hybrids a more comfortable compromise for many consumers.
Range anxiety is not only about how many chargers exist. Buyers also need confidence that chargers are in the right places, working when needed, compatible with their vehicle and not already occupied. In a market with uneven road quality and heavy congestion, those concerns become more pronounced.
This is why the Philippine market may not follow the same path as countries that built dense charging networks early. Instead, electrification could advance through a mix of battery EVs in cities, plug-in hybrids for flexibility and conventional hybrids for buyers who want lower fuel costs without changing refuelling habits.
A stronger second half of the decade
BMI expects EV sales growth to accelerate after 2026. It forecasts sales to reach 51,666 units in 2027, 65,432 units in 2028, 78,781 units in 2029 and 91,730 units in 2030. That implies average annual growth of 29.3 per cent between 2026 and 2030.
EV penetration is forecast to rise from 7.7 per cent in 2026 to 11.4 per cent in 2027, 13.7 per cent in 2028, 15.6 per cent in 2029 and 17.3 per cent in 2030. Internal combustion engine vehicle sales, by contrast, are expected to recover more slowly, from 390,974 units in 2026 to 438,106 units in 2030.
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The outlook suggests electrified vehicles will account for a growing share of industry expansion in the second half of the decade. But two risks stand out: slow charging infrastructure rollout and possible changes to incentives after 2028. Either could weaken affordability and consumer confidence.
The upside case is equally clear. If Chinese automakers intensify competition, battery costs continue to fall and public and private investment in charging accelerates, EV adoption could move faster than BMI currently expects. For the Philippines, the question is no longer whether electrification will happen, but whether infrastructure and policy can keep pace with the market’s growing interest.
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