Will Malaysia Still Lead The Electric Vehicle Charge In The Southeast Asian Region?

Energy
Monday, September 5th, 2022 10:30 am EDT

I just returned from a trip to Malaysia to attend a road safety seminar, the launch of a new device, and to meet up with fellow motoring journalists in the region.

I asked road safety advocate and motoring journalist Shahrim Tamrin would it not be favorable for Malaysia, with its national car brands Proton and Perodua, to quickly jump into electric vehicles? Are the barriers to developing the EV ecosystem in Malaysia simply an inadequate supporting infrastructure? Is it the price of the vehicles? Or consumer awareness and demand?  Why isn’t Malaysia, the country that started EV consciousness in the region, seemingly lagging behind?

After a few bowls of intoxicatingly delicious jalan doraisamy, a Malaysian mutton soup (I was told alcohol would have made it better but the only one we both knew is the rubbing kind), we delved into the topic of EVs in Malaysia.

Leading The ASEAN

Malaysia led the way among Association of Southeast Asian Nations (ASEAN) countries and in 2009 introduced amendments to its taxation system wherein imported hybrid vehicles will enjoy 100% import duty and 50% excise tax exemptions. The law applies to hybrid electric vehicles with petrol engines below 2,000 liters. This exemption was to end by 2011 and was revised to increase exemption of excise taxes to 100%. Then it extended it further to the end of 2013 in an attempt to increase the take up of HEVs.

In 2015, a company called Greentech Malaysia (Malaysian Green Technology Corporation) planned to set up 25,000 electric vehicle charging stations across the country by 2020. Today, only about 500 of the stations envisioned as part of its Electric Mobility Blueprint have been put up and a total of just above 600 charging stations of different kinds all over the country.

The new target now is to set up an additional 1,000 stations by 2025. These will be made up of DC chargers which can charge faster but are comparatively more expensive to build and maintain.

Significant to this discussion is the involvement of the national fuel retailer Petronas to include DC fast EV chargers at its stations starting with 10 for 2022. The fuel brand also inked a new partnership with Mercedes-Benz Malaysia (MBM) and EV Connection (EVC). EVC operates JomCharge network of charging stations.

Charging The Sales Side

Like any ecosystem froth with ICE vehicles and making a slow (and sometimes painful) transition of EVs, the buying of EVs in Malaysia increased not only with affordability (because of tax reliefs benefiting consumers) but also of the government’s efforts to encourage cutting down on carbon emissions in compliance to ASEAN Sustainable Development Goals aligned with the UN’s own SDGs.

Toyota brought the Prius to Malaysia in 2009, taking advantage of the tax break. Then it was Mitsubishi with its PHEV SUV line-up. Nissan came next but was not able to benefit from the full effect of the tax exemptions because only the import duties were removed. A 10% excise tax (which is much lower than the usual 75 to 100% for regular vehicles) was levied on the LEAF. The usual sales taxes remained.

However early this year, after the implementation of the Japan-Malaysia Free Trade Agreement proposals on exemptions, the LEAF now qualifies for full exemptions, except sales taxes.

More companies were given perks and as a result Hyundai, BMW (including Mini), Mercedes-Benz, and Volvo now have a range of EVs in their showrooms. In 2018-2021, about 9,000 vehicles were added to the total 22,000 EVs registered in the country, according to an MDAP study. The Malaysian Automotive Association says the increase of the take-up of BEVs also comes with the development of more charging infrastructure.

As in anywhere in the world, consumers are concerned with range, especially in this ASEAN nation with long roads and centers of commerce spread far apart. Of  the total 31,000 registered EVS, more than 95% are PHEV. In 2021, however, due to more tax exemptions battery-electric sales increased to 8% or 2,480 cars. Comparatively, using total vehicle sales versus EV sales, the existing adoption rate is lower compared to Indonesia or Singapore.

On The Production End

If one lists the number of exemptions for import duties, excise, and sales taxes as well as incentives under the Electric Mobility Blueprint, the objective of which is to hasten electric vehicle popularity and utilization, one would think by now Malaysia would be an a major electric mobility marketplace in the region.

The government’s many incentives to attract more EV makers to create an EV assembly hub in Malaysia has not taken off as fast as expected. Malaysia is the 3rd largest automotive market in the ASEAN next to Indonesia and Thailand. Most of the region’s manufacturing comes from Thailand, but Malaysia is home to nearly 30 assembly plants, import processors for vehicles, and manufacturing plants for automotive parts and components.

In the 12th Malaysia Plan for 2021 to 2021, it revised its carbon neutral goals by 10 years to 2050 at the earliest. The automotive and transport sector — the biggest contributors to emissions — are expected to respond favorably to the call for carbon neutrality.

Towards the end of the pandemic in 2021, Malaysian EV technology company, Eclimo launched an electric motorbike called ES-11. It featured a nano-structured Battery Monitoring System (BMS) that keeps watch on battery health; sends out alerts when the battery voltage drops; and comes with a tracking and a mobile app controlled geo-fencing system. Eclimo plans to sell 1,000 units before the year ends and 5,000 units by the end of 2023.

In 2020, Malaysia’s national car brand Proton said it was not keen on EV manufacturing because it requires a huge investment to reconfigure the assembly lines and the return would not make it commercially viable. But in 2020 it began its EV journey by partnering with smart, instead of rebranding a Geely-built car, which was sort of the original plan.

Called by its millennially-correct name #one (yes, pronounced ‘hastag one’) the car is a Mercedes-Benz product whose first venture was a micro city car that had a short popular run.

Since Proton’s involvement in this vehicle is purely a sell-and-service operation, keeping it feasible means investing in a charging network. Just last August 18, the company issued a statement that it will be collaborating with up to 8 local charging providers to set up the network. This may include plans of installing home charging units powered from the grid or via solar or wind sources.

In March this year, Volvo Malaysia (Volvo Car Malaysia Sdn. Bhd.,) said it would start completely knocked down assembly of XC40 Recharge Pure Electric. It will assemble and release at least one electric vehicle starting this year and produce at least one locally assembled EV every year until 2030. Volvo is the first car maker in Malaysia to have a PHEV in all segments.

Based on ASEAN free trade rules, the importation of CKD parts is subject to zero taxes. The EV line up will be assembled in Shah Alam, Selangor, and expected to bring additional employment to the region.

Delay, Not Lag

Malaysia will soon build the Volvo XC40 Recharge 2023. Image courtesy of from Volvo Malaysia

So has Malaysia lagged behind its regional peers?

Malaysia Automotive Robotics and IoT Institute (MARii) and the Malay Vehicle Importers and Traders Association of Malaysia (PEKEMA) believes it is catching up fast. The two groups, which have a very powerful influence over the development of the automotive sector, decided push development up two or three notches by signing a memorandum of agreement (MoA) towards the development of more EV infrastructure in the country. The plan is encouraging because the country has several important industries to back EV production and development — a strong semiconductor industry, copper mines, and copper wire manufacturing.

There are also plans to set up EV battery manufacturing in the country to complement what is to be the biggest regional battery plant in Indonesia. Both are to serve demands of Southeast Asia.

Here is a rundown of fiscal and non-fiscal incentives for EVs in Malaysia.

Complete cars imported from qualified countries are free from import duties and excise taxes until the end of 2023. This may be extended based on the agreements or developments that may ensue from the  National Electric Mobility Blueprint in which the target is to have 125,000 EV charging stations by 2030. For EVs assembled in Malaysia, full import and excise duty exemptions will be applied as well as a waiver on sales taxes until the end of 2025. Non-fiscal incentives for EV buyers include road tax exemptions and over $500 personal tax exemption for EV charging hardware and services, including the purchase, installation, rental, and subscription fees of EV charging facilities, until the end of 2023.

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