Malaysia’s electric vehicle (EV) market is approaching a key policy turning point, with the government expected to end completely built-up (CBU) import tax exemptions and the approved permit (AP) regime by year-end, an analyst said in its recent report.

According to BIMB Securities Research, this decision will likely shape the direction of the market — either accelerating liberalization and inviting more aggressive price competition or maintaining a controlled environment that protects local players.

“The policy outcome will not only affect the pace of EV adoption and pricing dynamics, but also influence the competitiveness of local original equipment manufacturers (OEMs), ongoing completely knocked down (CKD) investment strategies, and the overall valuation outlook for the automotive sector,” the research house said.

It is noted that the China EV price war, which began in late 2022 and intensified through mid-2023, marked a pivotal period of aggressive market correction in the world’s largest EV industry.

Amid rising competition, BIMB pointed out that Malaysia’s market dynamics are beginning to mirror those seen in China.

According to the report, BYD, one of China’s largest EV exporters, has ignited Malaysia’s EV price war with the launch of its 2025 Atto 3 Ultra, priced at MYR 123,800 ($29,333), representing a MYR 26,000 ($6160) reduction from the 2023 Atto 3’s MYR 149,800 ($35,493).

Early buyers benefit further from a special MYR 118,800 ($28,148) launch offer for the first 1,000 units, placing it in direct price parity with the Proton eMas 7 Premium (MYR 119,800 [$28,385] after discount).

BIMB highlighted that this move triggered a chain reaction across the industry.

It is also noted that Chery responded by slashing the price of its Omoda E5 from MYR 146,800 ($34,783) to MYR 119,800 ($28,385) in conjunction with the model’s one-year anniversary and the Raya festive season—a significant MYR 27,000 ($6,397) cut.

“These aggressive pricing decisions underscore early signals of an intensifying price-based competition, as more automakers align with consumer affordability trends in the lead-up to potential policy shifts,” said the research house.

Indeed, as Malaysia approaches the end of its CBU EV tax exemption and AP floor value policies by 2025, BIMB opined that Malaysia’s automotive industry stands at a strategic crossroads.

“The government’s next move—whether to extend, abolish, or revise these incentives — will profoundly shape the competitive dynamics of the local EV market,” it said.

BIMB, however, is more inclined toward that the CKD incentives will be extended until 2027 as it aligns with the government’s clear policy direction.

“The extension of tax incentives for CKD EVs until end-2027 reinforces Malaysia’s commitment to fostering local EV production, supply chain localization, and long-term industrial development,” it said.

According to the research house, this policy continuity provides greater confidence for investors and industry players.

It is noted that investment approvals in the transport equipment segment have shown a notable post-COVID recovery, reflecting renewed foreign interest in establishing CKD operations in Malaysia.

This includes increased activities from Chinese OEMs and strategic alliances involving Proton-Geely and Perodua’s in-house EV development.

However, BIMB remained cautious of potential regulatory headwinds — particularly the proposed implementation of Open Market Value (OMV) valuation for CKD vehicles expected next year.

“If introduced, OMV-based taxation could raise CKD vehicle prices by an estimated 8-20 percent, depending on component sourcing and vehicle specifications,

“Such a move may undermine the price competitiveness of locally assembled EVs relative to imported models and could temporarily dampen demand, especially in price-sensitive segments,” it noted.

Therefore, while the extended CKD incentives present a structurally positive backdrop, it opined that the successful execution of this policy hinges on regulatory clarity, stable cost structures, and continued public-private collaboration to scale up domestic EV production.

BIMB also noted the upcoming EV launches by Proton and Perodua, scheduled for late 2024 and 2025, are poised to significantly boost EV adoption in Malaysia by 2026-2027.

Following VinFast’s successful strategy in Vietnam, it noted both manufacturers can benefit from a vertically integrated production model that oversees all facets of EV development, from manufacturing to battery production.

“This comprehensive approach is expected to enhance operational efficiency and quality control, positioning them competitively in the EV market,

“The integration is anticipated to streamline processes, reduce costs, and maintain high standards, thereby facilitating more effective scaling of EV production,” said BIMB.

On the infrastructure development, the Low Carbon Mobility Blueprint (2021) set an ambitious target for Malaysia to install 10,000 EV charging points by 2025.

As of March 2025, a total of 4,161 charging points has been installed nationwide — comprising 2,857 AC and 1,304 DC units — representing 41.6 percent of the original goal.

This translates to an average installation rate of approximately 83 charging points per month since 2021.

“With only nine months remaining until year end, Malaysia would need to accelerate deployment significantly to meet its target, or risk falling short by nearly 60 percent based on the current trajectory,” said BIMB. 

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