The Philippines is set to manufacture its first locally produced hybrid electric vehicles (HEVs) following a planned investment by Mitsubishi Motors Corporation, the Department of Finance (DOF) said.

In a statement, Finance Secretary Frederick Go said the move could upgrade the country’s position in the global automotive value chain, noting its potential to transform the Philippines from a largely assembly-based industry into a higher-value manufacturing hub.

“This is a landmark investment that will redefine the future of our automotive industry. And the even more exciting possibility is that we could be an exporter of hybrid cars,” he said.

The DOF said the project will be undertaken by Mitsubishi Motors Philippines Corporation at its existing plant in Santa Rosa, Laguna, where the company plans to introduce hybrid production capabilities alongside its current vehicle lineup.

The initiative is aligned with the government’s broader push to develop an electric vehicle ecosystem, supported by policies such as the Electric Vehicle Industry Development Act and the proposed Electric Vehicle Incentive Strategy (EVIS), which aim to attract investments and encourage the adoption of cleaner transport technologies.

Officials said local hybrid production is expected to generate high-quality jobs, strengthen domestic supply chains, and support the growth of related industries such as parts manufacturing, battery systems and engineering services.

Beyond industrial benefits, the shift to hybrid production is also seen as a response to rising global fuel prices and supply uncertainties, particularly amid geopolitical tensions in the Middle East, which have pushed domestic pump prices into the triple-digit-per-liter range and prompted calls for wider adoption of electric vehicles.

Electric Vehicle Association of the Philippines President Edmund Araga earlier said EV registrations reached 29,715 units by mid-2025, already surpassing the 24,000 units recorded for the whole of 2024. Meanwhile, the Department of Energy is targeting EVs to account for about 50 percent of vehicles on the road by 2040, equivalent to around 2.5 million units.

Mitsubishi is also exploring the possibility of exporting hybrid vehicles produced in the Philippines to other markets, which could boost foreign exchange earnings and deepen the country’s integration into regional production networks.

Data for 2025 from the Chamber of Automotive Manufacturers of the Philippines Inc. and the Truck Manufacturers Association showed EVs accounted for 7.01 percent, or 32,489 units, of total vehicle sales among their members.

The government has been supporting the EV sector as part of its transition to clean energy and environmental protection through the Electric Vehicle Industry Development Act (EVIDA), which exempts EVs from the Unified Vehicular Volume Reduction Program for eight years from the law’s implementation. The measure also grants tax incentives and a temporary zero-tariff policy to attract investors.