Analysts foresee electric vehicle growth potential in Malaysia

April 12, 2024

42 3 minutes read

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Analysts have foreseen growth potential of electric vehicles in Malaysia, underpinned by new models launching and regulatory push.

However, the opined that the MYR 100,000 ($20.965) pricing floor currently imposed on completely built units CBU EVs, remained a hurdle for EVs adoptions.

Kenanga Research said in its recent report that excitement is building in the EV segment in Malaysia with the new launches of BYD Seal and Tesla Model 3 Highland, with expected introduction of locally-made first national EV (i.e. Perodua and Proton) in 2025.

It noted that Malaysia’s vehicle sales will be supported by new BEVs that enjoy sales and service tax (SST) exemption and other EV facilities incentives up to 2025 for CBU and 2027 for completely knock-down (CKD).

According to the research house, battery EV (BEV) new registrations in Malaysia have leapt from 274 units in 2021 to over 3,400 units in 2022 and 10,159 units in 2023 and are on track to meet national target for EVs and hybrid vehicles of 15 percent of total industry volume (TIV) by 2030, and 38 percent of TIV by 2040.

Meanwhile, it said the Malaysian government’s pledge to enable charge point operators (CPOs) to secure faster approvals for installation provides comfort as currently only 2,020 EV charging stations have been built to-date.

RHB Research also said in its recent report that the emergence of more EVs in the Malaysian auto market would add depth to the auto industry.

It noted that over the last few weeks, a few new EVs were launched in the country.

These include BYD Seal, Chery Omoda E5, and MG4 EV whose prices range from MYR 104,000 ($21,804) to MYR 200,000 ($41,930).

Furthermore, Malaysian automaker Bermaz Auto was recently awarded the distributorship rights for XPeng EVs in Malaysia, with its maiden model launched in the second half of 2024.

While the arrival of new EV models to the market would add depth to the industry, RHB opined this would not significantly change the total industry volume (TIV) this year given the MYR 100,000 ($20.965) pricing floor currently imposed on CBU EVs.

MIDF Research, on the other hand, said in its recent report that it believes Malaysian government policies will continue to favor electrification of the auto sector (and broadly, the land transport sector), in line with decarbonization ambitions in the National Energy Transition Roadmap and Low Carbon Mobility Blueprint with a target of achieving 15 percent/38 percent xEV (defined as BEV/ plug-in hybrid EV [PHEV]/hybrid EV [HEV]/ Fuel cell EV [FCEV]) penetration by 2030/2040 and 10,000 charging points by 2025.

At this juncture, a key policy to drive four-wheeler BEV demand is the 100 percent duty exemption for CBU BEVs up till 2025 and CKD BEVs up till 2027, said the research house.

However, MIDF also noted the MYR 100,000 ringgit ($20,966) floor price imposed on CBU BEVs still poses a challenge for more aggressive adoption given Malaysia’s mass market price point of below MYR 90,000 ($18,869).

MIDF also highlighted that in FY23, BEV penetration in Malaysia stood at just 1.3 percent.

“We reckon adoption could accelerate once CKD BEVs at, or below this mass market price point start to be rolled out,” it said.

According to the research house, the national cars are understood to be attempting to bring forward the introduction of national EVs within 2025-2027 albeit cost still remains a challenge.

However, it said the rollback of fuel subsidies could drive more aggressive BEV adoption at higher price points in the near term.

According to the Malaysian Automotive Association (MAA), Malaysia sold 799,731 units of new cars in 2023, with xEV accounted for approximately five percent of the TIV in Malaysia, showing a continued positive momentum for its demand.

It said the xEV sales jumped by 69 percent from 22,619 units in 2022 to 38,214 units in 2023, with 10,159 units of BEV and 28,055 units of HEV.

This year, MAA opined that the xEV demand and interest will continue to grow on the back of government support to promote its use and with more new and exciting xEV models being introduced.