I have just returned from a trip to Malaysia to attend a seminar on road safety, the launch of a new device and to meet other automotive journalists in the region.
I asked Shahrim Tamrin, traffic safety advocate and automotive journalist, wouldn’t it be beneficial for Malaysia, with its national car brands Proton and Perodua, to jump into electric vehicles quickly? Are the barriers to the development of the electric vehicle ecosystem in Malaysia simply inadequate supporting infrastructure? Is it the price of the vehicles? Or consumer awareness and demand? Why isn’t Malaysia, the country that pioneered electric vehicle awareness in the region, lagging behind?
After a few bowls of deliciously intoxicating jalan doraisamy, a Malaysian mutton soup (I was told the alcohol would have made it better, but the only one we both knew was the rubbing kind), we leaned on the subject of electric vehicles in Malaysia.
Malaysia has led the way among the countries of the Association of Southeast Asian Nations (ASEAN) and in 2009 introduced changes to its tax system under which imported hybrid vehicles will benefit from tax exemptions. 100% import duty and 50% excise duty. The law applies to hybrid electric vehicles with gasoline engines under 2,000 litres. This exemption was due to end in 2011 and has been revised to increase the excise duty exemption to 100%. Then it extended it until the end of 2013 in an attempt to increase HEV adoption.
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. a total of just over 600 charging stations of different guys all over the country.
The new goal is now to have an additional 1,000 stations in place by 2025. These will consist of DC chargers which can charge faster but are comparatively more expensive to build and maintain.
Important to this discussion is the involvement of national fuel retailer Petronas to include DC EV fast chargers at its stations beginning in 2022. The fuel brand has also signed a new partnership with Mercedes-Benz Malaysia (MBM) and EV Connection (EVC). EVC operates the JomCharge charging station network.
Billing on the sales side
Like any ecosystem foaming with ICE vehicles and making a slow (and sometimes painful) transition from electric vehicles, the purchase of electric vehicles in Malaysia has increased not only with affordability (due to tax breaks enjoyed by consumers) but also government efforts to encourage carbon reduction in line with ASEAN’s Sustainable Development Goals aligned with the UN’s own SDGs.
Toyota introduced the Prius to Malaysia in 2009, taking advantage of tax relief. Then it was Mitsubishi with its PHEV SUV range. Nissan came next but could not benefit from the full effect of tax exemptions because only import duties were removed. A 10% excise tax (much lower than the usual 75-100% for regular vehicles) was levied on the LEAF. The usual sales taxes remained.
However, at the beginning of this year, following the implementation of the Japan-Malaysia Free Trade Agreement proposals on exemptions, LEAF is now eligible for full exemptions except for sales tax.
More companies have received benefits and as a result Hyundai, BMW (including Mini), Mercedes-Benz and Volvo now have a range of electric vehicles in their showrooms. In 2018-2021, about 9,000 vehicles were added to the total of 22,000 registered electric vehicles in the country, according to a study by MDAP. The Malaysian Automobile Association says that with the increased adoption of BEVs comes the development of more charging infrastructure as well.
Like everywhere in the world, consumers are concerned about range, especially in this ASEAN country with long roads and shopping centers far apart. Of the total 31,000 registered SVEs, more than 95% are PHEVs. In 2021, however, due to more tax exemptions, battery electric sales increased by 8%, or 2,480 cars. Comparatively, using total vehicle sales versus EV sales, the existing adoption rate is lower than Indonesia or Singapore.
At the end of production
If one lists the number of import duty, excise and sales tax exemptions and incentives under the Electric Mobility Master Plan, which aims to accelerate the popularity and the use of electric vehicles, one would think that Malaysia would now be a major player. electric mobility market in the region.
The many government incentives to entice more EV manufacturers to set up an EV assembly center in Malaysia have not taken off as quickly as expected. Malaysia is the 3rd largest automotive market in ASEAN after Indonesia and Thailand. Most of the region’s manufacturing comes from Thailand, but Malaysia is home to nearly 30 assembly plants, vehicle import processors, and automotive parts and component manufacturing plants.
In Malaysia’s 12th plan for 2021 to 2021, it revised its 10-year carbon neutrality targets to 2050 at the earliest. The automotive and transport sector – the biggest contributors to emissions – should respond favorably to the call for carbon neutrality.
Towards the end of the pandemic in 2021, Malaysian EV technology company, Eclimo launched an electric motorcycle called ES-11. It featured a nanostructured Battery Monitoring System (BMS) that monitors battery health; sends alerts when battery voltage drops; and comes with mobile app controlled tracking and geolocation system. Eclimo expects to sell 1,000 units before the end of the year and 5,000 units by the end of 2023.
In 2020, Malaysia’s national car brand Proton said it didn’t like manufacturing electric vehicles because it requires huge investment to reconfigure assembly lines and returning would not make it commercially viable. But in 2020 it started its EV journey by partnering with smart, instead of renaming a Geely-built car, which was sort of the original plan.
Called by its millennial-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 popular short run.
Since Proton’s involvement in this vehicle is purely a sales and service operation, keeping it feasible means investing in a charging network. On August 18, the company released a statement that it will work with up to 8 local charging providers to set up the network. This may include plans for installing home charging units powered by the grid or by solar or wind sources.
In March this year, Volvo Malaysia (Volvo Car Malaysia Sdn. Bhd.,) announced that it would start completely reverse assembly of the XC40 Recharge Pure Electric. It will assemble and market at least one electric vehicle from this year and produce at least one locally assembled electric vehicle every year until 2030. Volvo is the first automaker in Malaysia to have a PHEV in all segments.
Based on ASEAN free trade rules, the import of CKD parts is not subject to any tax. The range of electric vehicles will be assembled in Shah Alam, Selangor, and is expected to create additional jobs in the region.
delay, not delay
So has Malaysia fallen behind its regional peers?
The Malaysia Automotive Robotics and IoT Institute (MARii) and the Malaysian Vehicle Importers and Traders Association of Malaysia (PEKEMA) believe it is catching up fast. The two groups, which have a very powerful influence on the development of the automotive sector, have decided to push the development two or three notches by signing a Memorandum of Understanding (MoA) for the development of more EV infrastructure in the country. . The plan is encouraging as the country has several important industries to support the production and development of electric vehicles – a strong semiconductor industry, copper mining and copper wire manufacturing.
There are also plans to set up EV battery manufacturing in the country to complement what will be the largest regional battery factory in Indonesia. Both must meet Southeast Asian demands.
Here is an overview of tax and non-tax incentives for electric vehicles in Malaysia.
Complete cars imported from qualifying countries are exempt from import duties and excise taxes until the end of 2023. This may be extended depending on agreements or developments that may arise from the National Electric Mobility Plan in which the objective is to have 125,000 charging stations for electric vehicles. by 2030. For electric vehicles assembled in Malaysia, full exemptions from import and excise duties will be applied as well as exemption from sales taxes until the end of 2025. The non-tax incentives for electric vehicle purchasers include road tax exemptions and over $500 EV charging equipment and services, including EV charging facility purchase, installation, rental and subscription fees, up to at the end of 2023.
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