It appears that the tax holiday that has sired the boom of electric vehicle sales in Malaysia is coming to an end soon – at least when it comes to CBU fully-imported models. Nothing has been officially confirmed, of course, but the lack of any announcement of an extension during the tabling of Budget 2025 last week was a damning non-answer, given that car companies will need to be told in advance if it’s the contrary to be able to firm up their plans for the country.
Exemptions on import and excise duties for EVs since 2022 have hitherto provided fertile ground for a slew of new brands to enter the market, primarily from China. This has turned the Malaysian market into a sort of free-for-all for foreign car companies, with only the RM100,000 floor price for CBU cars giving local carmakers Proton and Perodua some respite.
But the government’s intention has always been for these companies to set up CKD local assembly operations here, enticing them with an extension of tax exemptions until 2027. Now that the end of CBU exemptions has been implied, companies selling EVs in Malaysia are faced with a hard decision – either invest millions into building a new factory or exit the market.
will continue to enjoy exemptions until 2027
Of course, some companies have already begun local assembly of EVs, these being Volvo with the XC40 and C40 Recharge (the new EX30 will join them next year) and Mercedes-Benz with the EQS500. For others, CKD operations are either imminent (Chery with the Omoda E5, although the Q2 2024 timeline for that has come and gone without any news) or on the cards for the coming year.
In the case of the latter, firms that are set to locally assemble EVs by 2025 include Neta and Pekema subsidiary Central Auto Distributors (CADB) with the Dongfeng Box – both through the NexV Manufacturing (NMSB) plant in Rembau, Negeri Sembilan – as well as GWM through EP Manufacturing (EPMB) in Pegoh, Melaka. Also set to assemble cars locally is BAIC, also through EPMB, although its EV plans are hazy at best.
Then there’s Proton, which is widely expected to eventually build its forthcoming eMas 7 (stylised as e.MAS 7) locally and has plans to assemble smart vehicles, too. Perodua, which is developing its own sub-RM100k EV in-house, is a foregone conclusion.
Other brands such as Xpeng are on the fence with regard to their CKD plans, weighing up the cost of the investment versus the expected sales volume. Of those that have not revealed any plans for local assembly, the most notable will have to be BYD – its cars take up three of the top five spots on the sales charts, so an exit would deal a devastating blow to the local EV market.
Then again, the BYD brand is being managed by Sime Darby Motors in Malaysia, which has its Inokom factory in Kulim, Kedah that would make short work of any CKD needs. The marque has also only recently announced that it will market its premium sub-brand Denza here, again with Sime Darby as partners – something it wouldn’t have done if it was going to exit the market only 14 months later.
We expect most other brands that offer EVs in Malaysia to commence CKD operations in due course, including BMW and Kia which already assemble their petrol-powered models here. But there are a few others that only have a very slim chance of setting up a CKD plant, such as Porsche and the elephant in the room, Tesla.
Tesla’s incredibly specialised EVs are built at the firm’s four main Gigafactories in the US, Germany and Shanghai. It has steadfastly refused to set up CKD operations anywhere in the world, and even though plans to build Gigafactories in new locations have been reported time and again, the company has either dragged its feet or reneged on those plans entirely.
Now that it’s clear that CBU EVs won’t enjoy the same incentives after 2025 and will thus be unfavourably priced due to taxes, will these brands continue to sell electric models in Malaysia? There will be some who will be making their way to the exit door, certainly – look at what happened when similar incentives for CBU hybrid vehicles dried up in 2014, causing almost all companies to stop selling hybrid models. What will happen to after-sales support for existing customers if smaller brands leave the market entirely?
the government to extend incentives
We will know the answers to those questions in due time. Of course, we can’t rule out the government continuing to provide tax exemptions to Tesla in particular as part of its special arrangement under the BEV Global Leaders initiative (which, notably, never had local assembly as a prerequisite). The company has, after all, invested in a Supercharger network (now with 56 chargers in 12 locations) and is continuing to hire local staff despite not having the security of long-term tax exemptions.
Other brands like Porsche are also unlikely to offer CKD EVs (although it’s not impossible; Porsche does assemble the Cayenne locally at the aforementioned Inokom plant), but while sales might end past 2025, after-sales support, at least for the bigger brands, should continue. In Porsche’s case, buyers are far less sensitive to price increases, so cars like the Taycan and Macan could continue to be sold even at inflated prices – as is already the case with the rest of its models.
Over to you now – will the end of EV incentives entice you to buy a Tesla while you still can, or will the brand’s potential exit give you pause? Sound off in the comments after the jump.
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Good move for our economy. You cannot just say Net Zero and allow CBU to enjoy the same tax breaks. Setting up CKD operations benefit our economy way more. Sad that some brands may pull out totally but hey, take care of number one.
Another question is how about cars built in ASEAN?
Soon any automobile manufactured assembled at BRICS will gets exemption
True True… Import from China
Tesla, Mini, BYD, Xpeng etc.
Won’t be affected
Even if is affected
U still got cheap RON95 <rm3
why do you call tesla evs incredibly specialised? they are not any more specialised than any other dedicated ev like byd seal? stop sucking elon D
8 people with elon D in their mouth
Yea… I did asked the similar question in the previous post.
To be on the safe side, brands like Porsche, BMW, Mercedes and Volvo are likely to stay (even without CKD plant). They will still be around for after sales.
But I am not too sure for the other new players from China, who will stay and who will pack their bags and go.
I think Proton will be on the safest side, they will still be around for long term for sure.
Perodua EV is more of homegrown local develop model rather than leveraging on Toyota’s technology. Remain to be seen how good those battery and drive train will be.
Hyundai is fine too as they are under Sime Darby.
China branded EV on the other side…
The reason I did not include the Korean is because their sales volume even their ICE cars are not that encouraging. Even Porsche (1526 units) sell more cars than Hyundai (1507 units) in 2023. Thus as small volume brands scaling down which makes after sales service questionable. They are not premium brands like Porsche or Lexus that can still survive with low volume.
We don’t hear any exciting news about Hyundai or Kia EV these days..
You could be right, due to Hyundai has a very short warranty period of 2 years for their EVs.
But is still better than China brands bcos Sime Darby still represents Hyundai as a brand and is obligated to service the car and provide parts, just could potentially take longer.
hyundai EVs have 5 year warranty and 8 year battery warranty. it’s the same as BMW
Even better. Only the major Chinese brands will be able to stand in our market.
The industry is still playing out now in China. We don’t want to be stuck with EVs from brands that may go out of business in <10 years from now.
I wish phev hybrids enjoys these tarriff free for ckd. Makes buying decision even more compelling.
Proton needs some protectionism because they are surpassing the 100k mark, getting spanked by the competition so need to implement this lol
This affect EVs, which wont even be a fraction of Proton’s and Perodua’s product portfolios in the next few years. To put it plainly, CKD operations create more employment.
the ones with CKD right now are the less sought after cars.
As a rakyat here, we are sandwiched.
Buy ICE, petrol hike & about to extinct
Buy EV, expensive and TNB hike
Best is stick with whatever we have now..
Bicycle, less impacted. Only concerning is Roti Canai and Nasi Lemak increase price, otherwise the well love bicycle is inflation proof
The best is to use public transport.
Petrol bout to extinct? Wheres the dreamland ur in right now? Please wake up plss…. Even the chairman in BMW Merc VW Ford Toyota Honda dont dare to say that. You are indeed a joke. I bet when ur gene extinct the ICE will still be around dude.
Gomen ask you to ubah gaya hidup. Ride bicycle to work. Eat gardenia and maggi. If you buy EV you are mahakaya
Used cars that save fuel like Axia and Vios will probably go up. While gas guzzler SUVs and MPVs like Innova will crash in RV
PHEV is better than EV.
CKD has not benefitted anyone except some subpar suppliers here. it actually costs more to make the car here than in the original country, say taknak to ckd
EVs have always been a rich person’s play thing in Malaysia so it doesn’t really matter tbh. find me a person on RM2.5k/month even thinking about the BYD dolphin base spec. at RM100k it is still too expensive for the masses. then there is the matter of “where on earth do i charge this thing in my apartment complex?”. it’s a novel idea but the push for EVs will only make sense if there was an all out push for improving and optimizing the public transportation infrastructure. am not talking about building more trains (at least for now), am talking about utilizing what we have plenty of (roads) and developing an extensive BRT to connect neighborhoods to trains.
That made us feet colder reminding the hybrid blows a decade ago.
Even recon made us die harder with more expensive price tag than a Crown hybrid.
What are you talking about?
Pump petrol 5 minutes..charging car battery 1hour
Start Massage parlors beside/near the charging stations, “get a massage while you charge” ….
Enough time for a happy ending massage. Recharge your ding ding dong while your battery gets it’s juice
Ignoring the semi-troll nature of your post but I have to agree, at the moment EVs are more suitable for people who can charge at home and who don’t have to make regular trips above 200km to and fro. I am a two EV car owner by the way
When petrol is significantly more than RM2.05 then more people will be willing to make the sacrifice to make EVs work for them.
Forcing some car company to build factory here when the sales is so little will only increase the cost and final price of the car. At the end we will have to pay more for the car. Just like the AP scenario again.. help a few but burden a lot.
theres no else in this world which can produce any cheaper than china..ckd will likely be semi knockdowns reassembled here..i think the government should maintain at least until ev sales pick up hence a reduction of dependancy on ron 95, allow cheaper ev below 60k ..imagine how much cleaner the air quality would be with those morning jams be quieter and cleaner..current ev with lfp batteries are much safer and could go 350km easy in urban traffic..just charge it at home like your phone while u sleep..automotive world is evolving, a petrolhead myself..plan to used an ev daily and petrol during weekends and long trips..china might not have the best reputation in the past of quality products..but in the ev world at the moment..the are the best right now..
China is home to many EV brands, with some estimates suggesting that over 400 companies had at least some involvement in electric vehicles in recent years. However, only a fraction of these are still actively producing and selling vehicles at scale.
ASEAN import tax exemption policy applied? If so, Tesla may still have chance to compete in Malaysia.