Analysts have foreseen increased localization investment from original equipment manufactures (OEMs) in Malaysia electric vehicle (EV) sector next year as incentives for completely built up (CBU) EVs are set to expire.

Maybank Investment Bank said in its recent report that it expects to see more EV developments in Malaysia next year.

This comes as the import duty and excise duty exemptions for CBU EVs, along with restrictions on importing CBU EVs priced below MYR 100,000 ($22,287), are set to expire in end 2025.

Consequently, it opined that EV OEMs, particularly those in the mass premium segment (e.g. BYD, Tesla, XPeng, and Deepal), will need to consider localizing car assembly in Malaysia to remain price-competitive.

On the domestic OEMs front, Maybank noted that Proton has launched its first EV sport utility vehicle (SUV) (C-segment), the eMas 7, on Dec 16, 2024, with an estimated price of about MYR 120,000 ($26,744).

Meanwhile, Perodua’s inaugural EV, a B-segment hatchback, is scheduled for release by the fourth quarter of 2025, with prices expected to range between MYR 50,000 ($11,143)-MYR 90,000 ($20,058).

Notably, Perodua aims to position this as the most affordable EV in Malaysia, targeting an initial production capacity of 500 units per month.

It is noted that the traditional Japanese OEMs are also expanding their EV/HEV offerings.

Honda Malaysia plans to debut its first EV, the e:N 1, in 2025 (estimated price more than MYR 160,000 [$35,659]).

Toyota is set to introduce the facelifted Corolla Cross Hybrid, expected to be priced more than MYR 140,000 ($31,201), while Nissan has already launched the Kicks e-Power, an electric vehicle using a petrol engine as a generator, priced at more than MYR 110,000 ($24,515).

“The growing range of EV models in Malaysia could drive investment in public charging infrastructure as OEMs ramp up efforts to support their offerings,” Maybank said.

However, it noted government incentives remain critical to accelerate this agenda, given the slow progress towards achieving the national target of 10,000 EV chargers by 2025.

To meet this goal, it projected about 554 chargers would need to be installed monthly, compared to the average rate of about 111 units per month in 2024.

It is noted that Malaysia’s EV infrastructure development still lags significantly, with only 3,354 EV chargers installed as at Oct 2024 – far short of the national target of 10,000 EV chargers by 2025.

“Urgent action is required to bridge this gap as time runs short,” the research house said.

Based on its 2025 total industry volume (TIV) projection of 750,000 units, Maybank expects EV/hybrid electric vehicle (HEV) adoption to reach 3 percent and 5 percent, respectively.

It is noted that EV and HEV sales reached 9,955 and 22,913 units, respectively, in the first nine months of 2024, accounting for 2 percent and 4 percent of TIV, compared to 1 percent and 4 percent in 2023.

“Sustained growth in EV adoption will require further government policies and incentives to support the transition over the longer term,” it added.

While Malaysia’s EV still plays a minor role and accounted for less than 2 percent of the first nine months of 2024 TIV, CGS International sees potential inflection points in 2025.

“An accelerated rollout of EV charging infrastructure and targeted/removal of fuel subsidy in mid-2025 may drive a shift in demand towards EVs, which should benefit auto players with larger EV exposure, in our view,” the research house said in a recent report.

While more competitively priced Chinese players and EV model launches in Malaysia would be positive for TIV, it also opined that this may result in a price war in the automobile industry.

MIDF Research also said in a note that recent developments suggest that the Malaysian government may focus on incentives to promote the local assembly of CKD EVs, aligning with Malaysia’s goal to become a regional hub for affordable EVs

According to the research house, the cumulative total for new EV registrations in the first nine months of 2024 reached 15,800 units, marking a 114 percent year on year increase.

EVs now represent 2.5 percent of total car registrations in the first nine months of 2024, up from 1.2 percent year on year a year ago.

As Budget 2025 did not announce further extensions of import and excise duty exemptions for fully imported (CBU) EVs, MIDF also opined that this indicates that these tax incentives will conclude as scheduled (December 2025).

MIDF sees this may lead to a surge in EV demand before the tax break expires.

MIDF also noted that the exemptions for locally assembled (CKD) EVs remain effective until December 2027.

MIDF also highlighted that the Malaysian government’s plan to rationalize the petrol subsidy may increase car ownership costs, and hence encourages affected consumers to switch to EVs or opt for more affordable car models, given the current limited availability of budget-friendly EVs in the market.

MIDF, however, also noted that the potential inclusion of EVs under the high-value goods tax (HVGT) raises concerns about conflicting with the current policies aimed at promoting EV adoption. 

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