Thailand has for decades been a regional centre for auto production and an export base for some of the world's top carmakers, including Toyota and Honda.
Recent investments from Chinese electric vehicle makers like BYD and Great Wall Motor has shaken up the industry and Thailand has been active in offering incentives to court more firms.
"This is an important technology in the transition to electric vehicles," BOI secretary-general Narit Therdsteerasukdi said of hybrid models.
"Thailand has the capacity to be a key producer of hybrid vehicles ... and supporting hybrid production will preserve auto parts manufacturing," he said, adding the measures are expected to draw in 50 billion baht (USD 1.39 billion) worth of investments.
Excise taxes will be lowered in five years for hybrid vehicles makers that invest at least 3 billion baht in the next four years and include the use of local parts, the BOI said.
Vehicles will also need to have advanced driver-assistance systems to qualify.
Seven automakers are currently receiving benefits from incentives offered by the BOI, Narit said, four of those from Japan and three from China.
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