Honda e:N1 EV – CKD in Malaysia planned, but gov’t tax incentives need to be extended beyond 2027

Honda Malaysia has confidently expressed that it will be able to sell all its allocated volume of the fully-imported Honda e:N1 EV before the import duty and excise duty exemptions for CBU EVs ends on December 31 this year. The B-segment SUV, which was launched yesterday, priced at RM149,900, is a CBU unit built by Dongfeng Honda Automobile in China.

However, the company’s journey into electrification is set to continue beyond the end of tax exemptions, what with the announcement made earlier this year that three more EV models were set to be introduced here over the course of the next three years. With the tax breaks set to continue for locally-assembled EVs until December 31, 2027, will the company switch its focus to CKD and build its EVs, including the e:N1, here?

The company’s president and COO Sarly Adle Sarkum said this was the logical progression, but stated that a longer timeframe needs to be provided for CKD exemptions if the country’s ambition to have EVs accounting for 15% of total new car sales by 2030 is to be met. This would make for better plans to be defined, especially with regards to investment and returns.

“Moving forward, not only for Honda, I think all players have to explore CKD options. If you look at the LCMB (Low Carbon Mobility Blueprint), the government plans to populate by 2030 15% of the TIV (total industry volume) with EVs. If you look at last year’s TIV of 800,000 units, that’s roughly 120,000 units,” he said.

“Basically, CKD is the way to go. I understand where the government is coming from, but even if all players move to CKD, it (tax incentives) will stop by 2027. The government needs to further extend the period to cover at least five to 10 years. For example, if someone starts (a CKD project) in 2027, they need at least five years to recover the investment,” he explained.

Malaysia’s path into electrification, be it with hybrids in the past or with BEVs in the present, has seen the journey being peppered with a series of extensions. First announced in Budget 2022 as a two-year plan, the current import duty and excise duty exemption for fully-imported (CBU) EVs was then extended by a year to December 31, 2024, before yet again being extended by one more year to December 31, 2025.

Likewise, the excise duty and sales tax exemption for locally-assembled (CKD) EVs, which was also announced during Budget 2022. It was originally set to run until December 31 this year, but was then extended in the revised Budget 2023 to December 31, 2027.

There has been no word on whether the policy will finally run its course or be shifted yet again. Should the latter happen, especially with regards to CBU, it will be interesting to see if the RM100k minimum price cap for CBU EVs will also be extended accordingly. Hopefully, Budget 2026 will provide some clarity.

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