Malaysia's EV policy becomes more decisive, puts local value first: MAA president

KUALA LUMPUR: Malaysia's electric vehicle (EV) policy has become more decisive with the government seeking to ensure the shift towards electric mobility translates into local assembly, technology transfer and a stronger domestic supply chain.

This is rather than simply making the country a larger market for imported vehicles, according to the Malaysian Automotive Association's (MAA) top executive.

The challenge is becoming more pressing as Thailand and other Asean countries compete aggressively for EV investments, forcing Malaysia to strike a balance between attracting automakers and requiring them to create deeper local value.

MAA president Mohd Shamsor Mohd Zain said Malaysia's approach differs from Thailand's move to raise excise taxes on imported EVs. But the underlying objective is similar: encouraging carmakers to shift from completely built-up (CBU) imports to local assembly and manufacturing.

"For fully imported EVs, Malaysia now applies a 30 per cent import duty, 10 per cent excise duty and 10 per cent sales tax.

"For locally assembled CKD EVs, the government continues to provide full tax exemptions until the end of 2027," said Shamsor, who is also UMW Toyota Motor Sdn Bhd marketing director.

Malaysia has also raised the minimum cost, insurance and freight value for imported EVs from RM100,000 to RM200,000. The move that further signals the government's preference for local investment over continued reliance on imports.

"This gives a clear signal to manufacturers that the government wants to encourage more local assembly and investment, rather than depending mainly on imported EVs," he said.

EV Adoption Accelerates But Malaysia Trails Asean Peers

Malaysia's EV market is growing rapidly, but remains at an earlier stage of adoption compared with several regional peers.

PwC data showed xEV (all types of electrified vehicles) sales in Malaysia more than doubled to 39,000 units in 2025, although adoption stood at just five per cent compared with 44 per cent in Thailand, 36 per cent in Vietnam and 21 per cent in Indonesia.

The figures underscore the challenge for Malaysia to convert rising EV demand into deeper local manufacturing and supply-chain investment as competition for EV projects intensifies.

So far this year, the latest Road Transport Department registration data showed 47,508 EVs were registered in the first eight months, up about 103 per cent year-on-year from 23,396 units in the same period in 2025.

The August figure was a record, up 155.2 per cent year-on-year, with EVs accounting for 11.43 per cent of total vehicle registrations that month.

Proton is the dominant player, having registered 21,841 EVs in the January-August period, nearly three times BYD's 7,472 units.

More Needed

While some manufacturers have already begun local assembly, MAA cautioned that the broader impact of the policy shift would take time to materialise.

"Some manufacturers have already started moving into local assembly. So, I believe Malaysia is moving in the right direction, but it will take time for more investment and localisation to happen," Shamsor said.

Early progress includes OEM investments, initial developments in battery technology and new plants that are expected to generate jobs.

However, the association acknowledged that local content and deeper component manufacturing remain areas requiring further development.

The next phase, Shamsor said, would depend on manufacturers responding to the government's policy direction through new investments, supplier development and technology deployment.

"The government has already set a direction through the New Customised Incentive Mechanism and the new EV approved permit guidelines for CBU EVs.

"The government's focus is on higher technology, deeper localisation and creating more value in Malaysia, rather than relying mainly on imports or only carrying out assembly activities," he added.

As the industry adapts to the new requirements, MAA stressed that implementation timing will be critical, particularly for existing investors and manufacturers planning further commitments.

"Manufacturers need sufficient time to prepare and adjust to the new requirements, especially when it involves new investment, supplier development and technology," he said.

"For existing manufacturers that have already invested in Malaysia, a smooth transition is also important to support continued investment."

The association said a balanced approach, coupled with sufficient implementation time, would be essential for Malaysia to strengthen its EV ecosystem while remaining competitive for future investments.

"With the right balance and sufficient implementation time, Malaysia can strengthen localisation and continue to attract more investment, technology and skilled jobs," he said.

Meanwhile, Kenanga Research expects gradual transition to battery EVs, which currently benefits from tax exemption until 2027 for locally assembled CKDs.

Looking further, the firm has a balanced view of EV adoption eventually picking up and demand for gasoline vehicles eventually peaking, but not within the next five years due to infrastructure challenges.

"The domestic market is still protected by the subsidised fuel pricing mechanism which offers lesser incentives for middle-and lower

income-groups to switch from ICEs to EVs."

Kenanga Research noted that new registration for battery EVs leapt from 270 units in 2021 to 2,600 units in 2022, 10,000 units in 2023, 21,789 units in 2024 and 44,813 units in 2025, or 5.5 per cent of the total industrty volume.

The firm added that Malaysia aims for EVs to represent 20 per cent of new vehicle sales by 2030, with a longer-term vision for 80 per cent by 2050 (including hybrids).

"The government, currently focused on building out the EV ecosystem, has

revised its national EV charger target to 30,000 public charging points by 2030 from earlier 10,000 public charging points by 2025 and providing tax incentives to stimulate adoption and local production.

"As of July 2026, the current build-to-date are at 6,904 public charging bays with 4,665 AC chargers and 2,239 DC chargers," Kenanga Research said.