Malaysia is accelerating its electric vehicle(EV) market to meet environmental sustainability goals and boost growth in the automotive sector, with more carmakers looking to launch local EV production facilities and tap into the growing consumer thirst.
With Malaysia now becoming the second-largest automobile market in Southeast Asia behind Indonesia, many vehicle manufacturers have recognized the vast economic potential of the country's auto sector, with the transition to new energy vehicles also viewed as a key area for expansion.
Malaysia's main national carmaker Proton, which is owned by China's Geely, launched its first locally assembled electric vehicles in early September, marking a new milestone in the country's industrial journey.
China's BYD leads in electric vehicle sales in Malaysia, while Proton's "e.MAS" is the country's best-selling EV model. Previously, these vehicles were assembled in China by Proton's parent company Geely until the new local assembly plant was opened last month.
Other Chinese automakers are expected to establish plants of their own, giving a significant boost to Malaysia's green and automotive industry goals.
While setting a minimum ceiling price of around 25,000 U.S. dollars to protect companies making internal combustion engine cars locally, Malaysia's government has effectively waived taxes on imported EVs since the start of 2025.
But with that tax exemption for imports set to expire at the end of the year, one analyst said there could be a "scramble" among big auto firms to take advantage before the incentive ends.
"The prices are just going to head straight up. In some cases, it could be up by 50 percent to 100 percent, perhaps. So there's a scramble amongst the serious players, the big players to start setting up local production facilities so that they also get to enjoy the tax-free incentive post-2025," said Alexander Chia, head of International Equity Research at the RHB Investment Bank.
In addition to Proton, Malaysia's second national carmaker Perodua, owned by Japan's Daihatsu, is also slated to begin local EV production in the coming months. China's Leapmotor, in partnership with Europe's Stellantis, as well as BYD, have also announced plans to follow suit.
Many believe this potential influx of global automakers is good news for Malaysian consumers.
"It's a good practice in terms of international trade principles to actually be open to whoever wants to come into the market. They are taking the risks. So I think that should be welcomed because competition would drive higher efficiency, as well as lower the costs for consumers and giving consumers a wider choice here," said Yeah Kim Leng, an economics professor at the Sunway University in Kuala Lumpur.
Some insiders note that these developments will bring opportunities for Malaysia's well-established network of component part makers but say they will also need to up their game to cater to these new EV assembly operations.
Meanwhile, others have called on Malaysia's government to provide more incentives and expand charging facilities if it wants to accelerate the adoption of EVs and boost the sales of locally-assembled cars in the process.
Malaysia accelerates EV market to support green goals, fuel automotive growth
