If ICE cars followed the new EV power-based road tax structure, will it be cheaper or more expensive?

You must have already heard about the new road tax structure for electric vehicles (EVs), announced this week by the transport ministry. Set to be in place from January 1, 2026, the EV road tax structure replaces the previous template from 2019 and is meant to encourage EV adoption with rates that are comparatively lower than internal combustion engine (ICE) vehicles.

Unlike ICE vehicles that are taxed based on engine capacity, EVs don’t have engines, so what’s being measured with battery-powered cars are power, typically measured in kilowatts (kW) for EVs, as opposed to PS/hp, which is more common with ICE cars in Malaysia. One horsepower is equivalent to 0.746 kW, 100 hp = 74.6 kW.

The EVs are then grouped into different motor(s) output power bands, just like how it is with ‘cc’ for engines. We’ve already done a comprehensive explainer on the new EV road tax structure, and you can view it here along with a road tax list for all EVs currently sold in Malaysia.

If ICE cars followed the new EV power-based road tax structure, will it be cheaper or more expensive?

The BYD Seal’s road tax starts from RM335 but nearly triples to RM965 if you go for the Performance AWD

But what about ICE vehicles, which the majority of Malaysians own, and will continue to own in the foreseeable future? Will there be a change in road tax calculation based on power instead of engine capacity? Unfortunately no, the government has confirmed. So, moving forward, EV road tax will be based on kW and ICE will continue with cubic capacity.

Which is antiquated. Even before EVs became mainstream here, holes have been punched through the cc-based ICE road tax format, first by downsized turbocharged engines and then plug-in hybrids. Both these powertrain developments ‘cheated the system’ with smaller capacity engines, supplemented by turbocharging or electric motors in the case of PHEVs to make up the power deficit.

Disparate examples include a RM90+k Nissan Almera paying the same RM20 road tax as a RM22k Perodua Axia E (both 1.0L), a Myvi paying the same as a far bigger and more powerful Honda HR-V Turbo (both 1.5L) and a Mercedes-Benz A200 (1.3L) paying less road tax than a Proton Persona (1.6L). A Toyota Camry owner forks out more for road tax than his friend with a BMW 530i too (RM867 vs RM379). An example of a small engine with very high output is the Mercedes-AMG A45S, which 2.0L engine puts out 421 PS. Not too long ago, you’d need a 4.0/5.0 litre engine to get that much power.

If ICE cars followed the new EV power-based road tax structure, will it be cheaper or more expensive?

Theoretical road tax for ICE cars if based on power – click to enlarge

A power-based road tax structure would also cover hybrids and PHEVs better, as currently, the electrified power in those cars aren’t taxed. That’s exactly how we had a RM1.2 million BMW i8 with sci-fi looks and scissor doors liable for just RM90 a year in road tax (1.5L engine), while a similarly-priced Mercedes-AMG GT (4.0L V8) owner coughed out RM6.5k per annum.

And then there’s the topic of old cars. Remember the days when the number on a car’s boot lid corresponded with its engine size? Those cars – mostly European – are now affordable (to purchase) and many still have plenty of life in them with some TLC, but high road tax in relation to the car’s current value holds many back. Many such old cars with large engines (but relatively low power in today’s context) are abandoned because it costs so much to keep them road legal.

Take a look at the list we compiled, which compares an ICE car’s theoretical kW-based road tax (just like for EVs) versus their actual road tax. Save for a few outliers – mostly PHEVs or cars with downsized turbo engines – many cars would have lower road tax, some substantially so. The biggest difference came from the pick-up trucks (Hilux and Triton, over 80% less) and supercars/luxury cars from Ferrari and Rolls-Royce (Ghost -92.4%). Is your car in the list? Check out how much you’d have to pay if road tax is based on power.

The near-RM100k Almera is charged the same RM20 road tax as the RM22k Axia E in the cc-based system

We understand that road tax is a big revenue generator for the government, which collected nearly RM3 billion from vehicle owners last year from this avenue alone, so it’s definitely not in their interest to reduce road tax, especially for high-end cars. As for those who are saying that road tax for EVs is still too expensive, we hope that this little exercise have given you some context.

Instead, the kW-based road tax system is favourable to EV adopters, which is in line with the government’s green agenda. Take this system and apply it on ICE cars – which the authorities have said there are no plans to – and we can see that road tax for a big portion of cars on the road will come down. If anyone should complain…

It’s ICE drivers, who are paying a higher tax compared to a similarly-powered EV, and we’re not even talking about torque and acceleration, the actual things that make an EV feel way more ‘powerful’ than what their kW figure suggests. It would be fair if road tax for ICE and EVs are measured on the same stick, but we’re not hopeful that this will happen, for the above-mentioned reasons. The current rates for ICE cars “are already low and reasonable,” Anthony Loke said.

Suggestions? ICE cars could adopt a kW-based road tax structure, but with higher rates than the current EV template. This would future-proof the structure against downsizing and electrification engine developments, while charging powerful engines more (rightly so). Ditching cc for power may see road tax revenue drop, but this could then be balanced by high-powered cars (the main beneficiaries of kW-based road tax) consuming more petrol, which blanket subsidy will be removed anytime now. What do you think?

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Danny Tan

Danny Tan loves driving as much as he loves a certain herbal meat soup, and sweet engine music as much as drum beats. He has been in the auto industry since 2006, previously filling the pages of two motoring magazines before joining this website. Enjoys detailing the experience more than the technical details.

 

Comments

  • MassivelyAnnoyed on Jun 06, 2024 at 6:38 pm

    Road tax charge based on value of car. Simple. If insurance can do it I don’t understand why road tax can’t. Then set a minimum amount to be paid once residual value fall below certain level.

    Like or Dislike: Thumb up 3 Thumb down 1
    • Dah Menang Semua on Jun 07, 2024 at 5:19 pm

      Interesting theory/ article by PT

      Complex chemistry behind ICE should also
      consider environmental impact +buyer group

      – fuel consumption (govt test scenario)
      – carbon emissions (govt test scenario)
      – 0-100 performance (<3s <4s <5s <5.5s <6s)
      – price cat (elite, premium, standard, economy)

      Like or Dislike: Thumb up 4 Thumb down 0
  • Maha kaya on Jun 06, 2024 at 6:58 pm

    This author makes a better transport minister than Loki

    Like or Dislike: Thumb up 1 Thumb down 0
  • MutsCar on Jun 06, 2024 at 7:34 pm

    This is comparing Apples with Oranges. EV are HEAVY * Due to batteries ) and DOES NOR Pollute the Air and NOISY exhaust. Also does NOT have HEAVY Govn Subsidies ( Over 50 Billion for 2023 ?? ). Account for these and HIGH Performance ICE road Tax are dirt cheap.

    Like or Dislike: Thumb up 0 Thumb down 3
  • dong Gor on Jun 06, 2024 at 8:15 pm

    once the fuel subsidy is removed, all the road tax should go down to a standard fee like in many other countries. and remove the ridiculous excise duty too! removing subsidy on gasoline, chicken & eggs, electricity etc won’t burden the rakyat. So removing excise duty should not burden the government as well.

    Like or Dislike: Thumb up 2 Thumb down 0
  • Marque Brownlee on Jun 06, 2024 at 8:40 pm

    No there far from future EV car comes with variable KW output on demand with the advent of super efficient superconducting motors and next generation of power storage system. hinting future 1KW equivalent to present 100KW power

    Like or Dislike: Thumb up 1 Thumb down 1
  • Shazz on Jun 06, 2024 at 9:04 pm

    If this revision is made true as predicted, demand for used vehicles with big engine will surge

    Like or Dislike: Thumb up 0 Thumb down 0
  • Wah Ah Beng on Jun 06, 2024 at 10:02 pm

    Small matter for those who rich lah. Only those kiasu pinjam 8 years 90% loan byd seal driver yang suffer.

    Like or Dislike: Thumb up 1 Thumb down 0
  • Afeeq Hasan on Jun 07, 2024 at 5:33 am

    The theoretical road taxes are better and more fair. Why should the Axia pay less in road tax compared to the Almera? If they both used the road the same. If you want to tax based on “richness” go tax income or something along that. If along the lines a car enthusiast wants to buy a nicer performance car – or a family wants to buy a quality used car, why discourage them. At least make it so that it goes down drastically with age – maybe after 4 years?

    Like or Dislike: Thumb up 0 Thumb down 0
  • That’s funny.

    “We understand that road tax is a big revenue generator for the government, which collected nearly RM3 billion from vehicle owners last year from this avenue alone, so it’s definitely not in their interest to reduce road tax, especially for high-end cars.”

    Modern cars are producing more horsepower with lower CC. Govt should have adopted the same structure as EV. This can definitely generate more income for the govt, and at the same time, fair for B40 & M40 who drives high capacity engine with low HP. That statement to me is to benefit more rich people compared to low and middle income. To me, that is total BS.

    Like or Dislike: Thumb up 2 Thumb down 0
  • padawan on Jun 07, 2024 at 9:40 am

    roadtax should be calculated based on the noise the vehicle makes. the louder, the more expensive. this will prevent dumb car modifications and loud exhausts.

    Like or Dislike: Thumb up 1 Thumb down 0
  • i'm curious about purpose of road tax on Jun 07, 2024 at 9:43 am

    anyone know this pls share why. i have been thinking what is the main reason behind the roadtax structure. based on what perspective they set ICE roadtax based on engine capacity, here’s how i try to imagine:

    1. To tax the rich with higher rate?
    well, i can understand this if it is 20-30 years ago, typical expensive ICE cars with high engine capacity are expensive (a.k.a luxury). so they tax it higher when engine capacity goes higher? if yes, this is not even relevant at all right now. conti cars sold at >RM200K, and many models taxed the same / lower than mid-range jepunis brands? how is this fair?

    2. To tax cars that produce more air pollution?
    in general, bigger ICE car engine capacity produce more air pollution (i think), so they tax more those big engine capacity? if this is reason, higher tax on EV with higher kW output doesn’t even make sense.

    3. To put higher tax for car with heavier weight?
    in general, the bigger the engine capacity for ICE car, the heavier the car is, causing higher chance to damage the roads and to cover cost to repair / maintain roads by JKR?

    4. To put higher tax for car that has higher chance to cause accident?
    The bigger the engine capacity, the higher the power, the faster the car, the higher the chance of driver driving fast and cause accident?

    in my opinion, either tax based on engine power output/ horse power, or tax based on car OTR price is the fairest way.

    Like or Dislike: Thumb up 3 Thumb down 0
  • Squid on Jun 07, 2024 at 10:30 am

    A simple software flash for both ICE & EV can increase power tremendously so its still not a foolproof mechanism.

    Like or Dislike: Thumb up 0 Thumb down 0
  • kckfen on Jun 07, 2024 at 11:04 am

    I wish there will be more comparison with ICE car with PHEV, like those new PHEV with higher KW but at 1.6L cc road tax… i think those PHEV owner will be very happy pay low tax base on cc but have higher kw performance.. like the example Volvo phev

    Like or Dislike: Thumb up 0 Thumb down 0
  • 4GR-FSE on Jun 07, 2024 at 11:49 am

    Let’s put it this way, the reason that EV roadtax is so cheap is to entice buyers to switch to EV. If there are no incentives, people are reluctant to embrace new technology.

    But anyway, I will still be happy if they reform the roadtax for ICE so that I only pay RM180 for my 2.5L instead of RM880.. lol

    Like or Dislike: Thumb up 1 Thumb down 0
  • Sohai on Jun 07, 2024 at 11:23 pm

    It is equally not straight forward to charge roadtax to hybrid vehicles base on its power.
    The combined outputs of the petrol and motor are not just a simple sum, as the output would peak at different circumstances and not consistent.

    Like or Dislike: Thumb up 0 Thumb down 0
  • Niama on Jun 07, 2024 at 11:28 pm

    You want 100% consistency between ICE and EV? Easy.
    No road tax.

    Like or Dislike: Thumb up 0 Thumb down 0
  • Expensive cars get the most savings. Cheap common cars save nothing/may cough out extra for roadtax. Kesian ativa owners, congrats rolls Royce owners

    Like or Dislike: Thumb up 1 Thumb down 0
 

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