Malaysia: The next EV hub?
Malaysia’s burgeoning electric vehicle (EV) sector is drawing attention as the government pushes for zero-carbon emissions and domestic manufacturing, reports Lianhe Zaobao correspondent Seoow Juin Yee.
“Malaysia’s automotive market is transitioning from traditional fuel vehicles to new energy vehicles (NEVs), with domestic electric cars set to launch next year. Overall sales are expected to be quite significant.”
Eric Moo’s company Smart Mobility is one of the distributors of the electric vehicle (EV) brand Smart in Malaysia. The brand has launched two pure EVs — Smart #1 in November 2023 and Smart #3 in July 2024. The former sold 1,000 units within one month of its launch, ranking among the top three in sales for high-end electric SUVs. Based on this sales performance, Moo predicts that Proton’s upcoming domestic EV will be very well received.
Favourable policies for EV sales growth
Moo told Lianhe Zaobao that Malaysian consumers’ acceptance of EVs is steadily increasing, and the popularity of EVs in urban areas is also on the rise. Apart from the different driving experience, another reason for this is the government’s policy incentives.
Over the past couple of years, the Malaysian government has introduced several favourable policies for NEVs. For example, the 2022 budget exempted EVs from import and sales taxes for three years, and EV owners can receive road tax and income tax rebates, directly driving the surge in EV sales. On the roads of the capital Kuala Lumpur and other cities, EVs are gradually becoming a common sight.
According to data from the Malaysian Land Public Transport Agency, EV sales in the first half of this year surged by 148% compared with last year, reaching 10,664 units, making it one of the highest-selling countries for EVs in Southeast Asia. During the same period, Indonesia saw a 104% increase in EV sales, reaching 11,943 units; Singapore’s growth was 218%, selling 6,019 units.
“... Currently, EVs on the market are selling for over 100,000 ringgit, which is not affordable for the average middle-class consumer.” — Professor Wong Chin Yoong, Department of Economics, Universiti Tunku Abdul Rahman
Malaysia introduced EVs five or six years ago, mainly high-end models such as the BMW iX and Porsche Taycan. Due to high prices and a lack of policy incentives, EVs have not been able to spark a sales boom.
Moo said that EVs originally belonged to a niche market, but with the government’s tax incentives, the EV market has quickly heated up, attracting multiple brands to enter the Malaysian market. “Currently, there are over 15 EV models available in Malaysia, making this an absolutely revolutionary year for the automotive sector,” he added.
Domestic EVs may disrupt market
Although EV sales in Malaysia have been increasing every year, they currently only account for 2.6% of the overall automotive market. Analysts point out that the relatively high pricing of EVs and the lack of charging facilities in suburban areas are deterring consumers.
Professor Wong Chin Yoong from the Department of Economics at Universiti Tunku Abdul Rahman said in an interview that even though Chinese EVs are cheaper than those from European and American brands, there is still a significant price gap compared with domestic petrol vehicles in Malaysia.
Wong said, “Proton petrol vehicles are priced at around 100,000 ringgit (US$22,866), while the cheapest Perodua petrol cars are priced at 30,000 ringgit. Currently, EVs on the market are selling for over 100,000 ringgit, which is not affordable for the average middle-class consumer.”
Proton’s first EV, the e.MAS 7, is now available for pre-order. The company previously committed to affordable pricing for the public, and announced on 26 October that prices would start from 120,000 ringgit.
“Some people still have reservations about Chinese brands. The introduction of domestic EVs in Malaysia not only offers a pricing advantage but also brings greater convenience in parts supply and after-sales service...” — Yew Hong Chin, a Malaysian commentator
Malaysia’s Minister of Investment, Trade and Industry Zafrul Aziz revealed earlier that the first EV from Perodua will officially begin production next year, with a price set below 100,000 ringgit.
Malaysian commentator Yew Hong Chin predicts that the launch of domestic EVs will be a turning point in the market, and combined with the government’s adjustment of the RON95 petrol subsidy, these factors are expected to boost the popularity of EVs.
“Some people still have reservations about Chinese brands. The introduction of domestic EVs in Malaysia not only offers a pricing advantage but also brings greater convenience in parts supply and after-sales service, leading to higher consumer confidence in domestic brands, ” Yew added.
Yew believes that as EV sales increase, the authorities should expedite the construction of charging stations to prevent charging infrastructure from lagging behind.
Expanding EV industry chain
The Malaysian government is making significant investments to stimulate EV sales, aiming to attract manufacturers to invest locally through sales growth. This supports Prime Minister Anwar Ibrahim’s National Energy Transition Roadmap and New Industrial Master Plan 2030 to achieve national energy transformation and enhance value-add in manufacturing.
... while promoting EV sales, the Malaysian government also hopes to expand the EV supply chain to become a manufacturing hub for EV brands in Southeast Asia, thus driving economic development. — Wong
Universiti Tunku Abdul Rahman’s Wong analysed that the government sees EVs as a sector that would drive industrial value-added growth and help the nation achieve its 2050 zero-carbon emission goal. The government has also set sales targets for EVs, at 15% of total automotive sales by 2030, 38% by 2040 and 80% by 2050.
Wong added that while promoting EV sales, the Malaysian government also hopes to expand the EV supply chain to become a manufacturing hub for EV brands in Southeast Asia, thus driving economic development.
He said, “The EV industry will promote the growth of other related sectors, including battery manufacturing, automotive technology and green industries, making it a key strategy for economic development. Malaysia’s years of experience in the traditional automotive sector provides an advantage for EV development.”
Additionally, ASEAN’s tariff-free policy allows EV manufacturers to export EVs from Malaysia to other member states without paying high tariffs.
Currently, the EVs in the Malaysian market are mainly imported. Minister Zafrul said that the government hopes that foreign automotive manufacturers will set up assembly plants in Malaysia to establish a complete industry chain and reduce costs.
In April last year, China’s Geely Automobile Group announced a collaboration with Malaysia’s DRB-Hicom to create a high-tech automotive valley in Tanjung Malim, Perak. This significant investment marks a new chapter in Malaysia’s EV ecosystem.
Since then, several brands have announced investments to set up EV assembly plants in Malaysia. Chinese brand Chery’s Omoda E5 pure EV will be assembled in Malaysia this year. Swedish automotive brand Volvo will begin assembling its new EX30 EV in Malaysia starting next year, with plans to export to Southeast Asian neighbours.
This article was first published in Lianhe Zaobao as “马国积极吸引投资 欲成为东南亚电动车生产中心”.
