Reasons & Challenges On Why Malaysia’s EV Adoption Rate Is Slow

Talks surrounding Electric Vehicles (EVs) have been growing as of late. It’s widely accepted that EVs can be a way to reduce the impact of global warming via cleaner technology and phasing out greenhouse gas emissions. 

Our neighbouring SEA countries have already taken multiple steps forwards in the EV race, with Thailand and Vietnam ramping up production, and Singapore soon to lower taxes for EVs as well as stopping diesel car and taxi registrations.

Upon seeing these developments, we have to question: what about Malaysia? Why are we still slow to do the same?

1. Unclear Goals For Implementation

Launched in February last year, the National Automotive Policy 2020 (NAP2020) lacks details. The plan fell short of laying out specifics on incentives for industry players and was bundled together with other types of energy-efficient vehicles (EEVs). 

The NAP painted broad strokes with 5 key objectives: 

• Development of a Next Generation Vehicle (NxGV) technology ecosystem,
• Expansion of the Mobility-as-a-Service (MaaS) sector, 
• Supporting the domestic automotive industry to cope with the IR4.0, 
• Ensuring that the overall ecosystem benefitted from the NxGV ecosystem, and
• Reducing carbon emissions.

Despite touching on 7 roadmaps and blueprints to achieve by 2030, Malaysia still lacks clear milestones to track our progress. Perhaps we can follow in the footsteps of leading ASEAN countries, including Thailand, Indonesia and Singapore. 

Thailand, for example, set a goal back in 2015 to create 1.2 million electric vehicles by 2026. Further, it also planned to cover the areas of industry incentives, standards, infrastructure and charging prices, etc. by 2036.

Indonesia is looking for EVs to make up at least 20% of its overall production by 2025, including 2,200 EVs, 711,000 hybrids and 2.1 million electric motorcycles. 

For Singapore, its Budget 2020 intended to phase out petrol and diesel-powered vehicles by 2040. Come Budget 2021, its government allocated S$30 million (about RM92 million) over the next 5 years for EV-related initiatives, including building more charging stations.

Given the lack of clarity over EV development in Malaysia, industry players overseas are reluctant to invest here. This leads to my next point.

2. Focusing Too Much On Building Petrol-Powered Cars

Malaysia is still highly focused on manufacturing cars powered by internal combustion engines, and Hyundai, a significant foreign player that’s invested in EV technology, will even be moving its regional headquarters from Mutiara Damansara to Indonesia.

Hyundai is also already building a small-scale EV production facility in Singapore with a planned target of 30,000 units per year by 2025. Besides Hyundai, Toyota Motor Corp has planned to invest US$2 billion (about RM8 billion) to develop EVs in Indonesia from 2019 until 2023.

Toyota president Akio Toyoda said in a statement, “Because the Indonesian government already has an EV development map, Toyota considers Indonesia as a prime EV investment destination.” This speaks volumes on the inadequacy of our aforementioned NAP2020.

Vietnam, too, is joining the race, with homegrown carmaker VinFast revealing 3 new electric SUVs it plans to build this year.

Brands are choosing to invest in Thailand as well. Since 2018, the country’s Board of Investment (BOI) has approved investment applications from BMW, Mercedes-Benz, Toyota, Honda, and Nissan. Late last year, the BOI also took on investments from Mitsubishi and SAIC, among others.

Carmakers who have already invested in Malaysia are now criticising the lack of progress. Just this week, Mercedes-Benz Malaysia said that it remained committed to its EV strategy but needed a more defined industry roadmap for it to do so.

3. No Subsidies For Consumers To Buy EVs

The exorbitant cost for EVs can turn Malaysians away from making the switch for now. Take Tesla’s Model S for example with its price tag over RM650,000. It makes adoption almost impossible for the general M40 Malaysian public.

More economical options come in the form of Renault’s Zoe and Nissan Leaf, starting at RM145,888 and RM180,566 in the local market respectively. With such rates, EVs are most accessible to those within the T20 segments, especially without incentives from the government to make the switch. 

According to a survey conducted by Rakuten Insight in 2019, about 65% of Malaysian respondents stated that tax rebates would motivate them to buy an EV. Additionally, the availability of charging stations nearby would also incentivise about 56% of Malaysian respondents to buy an EV.

Malaysia can look to countries like Norway for some ideas, which saw a surge in 2020 for purchases of EVs. To increase demand, the government provided EV drivers with a 90% discount on road tax.

Though the NAP left out any mention of incentives or tax breaks for EVs, MITI’s deputy minister Ong Kian Ming said that such details have not been finalised yet. 

“The incentives will be discussed in the one of the 7 roadmaps that we’re rolling out, and everything will be put into context within the Automotive Business Development Council (ABDC) where all incentives are processed together with all the stakeholders,” he said. Hence, we can only await more updates for now.

4. We’re Stuck Building The Parts, Not The Cars

Malaysia already has a good ecosystem in the production of lithium batteries, which are used in the production of EVs. In an article by The Edge, CEO of the Malaysia Automotive, Robotics and IoT Institute (MARii), Datuk Madani Sahari said that Samsung SDI’s plant in Negeri Sembilan has been producing lithium cells meant for EVs.

As Malaysia’s already late to the game, NanoMalaysia’s CEO Rezal Khairi Ahmad suggested we focus on building components instead of actual EVs themselves. NanoMalaysia itself is first building a fully-local hybrid car.

He recommended that the country shouldn’t exactly focus on getting foreign direct investments (FDIs) from major automakers to set up assembly lines here either. Even though the assembly plants will be churning out high-value products, the jobs created will still be low-paying, he added.

Instead, he added that Malaysia should develop technologies that will be part of the EV ecosystem. These technologies, designed, developed, and produced by local companies and talents will create more high-paying jobs than assembly plants.

Reaffirming how EVs may only cater to a small market segment, particularly the country’s T20, Rezal added, “So, we must think differently to become a high-value EV economy by looking at the components, the parts. We design, develop and produce. We may not be able to address those in Malaysia, but we will be able to export to our neighbouring markets in Asean and beyond.”

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Though Malaysia may have already lost the game in attracting FDIs from well known brands, we may still have hope in the form of Proton. The Malaysian car manufacturer was acquired by China’s Geely in 2017, who also has their own fully electric car, the Emgrand EV. 

Based on statements by Proton Edar’s CEO Roslan Abdullah back in August 2020, however, it doesn’t seem like Proton will be making any moves in the EV scene anytime soon.

He cited the disparity between the huge investments needed and the returns EVs would yield for now being something that wasn’t commercially viable for Proton, hence their reluctance. Furthermore, he said consumers needed to first be better educated and more charging stations would have to be set up before the EV market here can grow.

It’s clear that government agencies will need to have further discussions with relevant stakeholders on what proper strategies can actually boost EV adoption in Malaysia, and perhaps even drive its production locally.

• You can read more articles we’ve written about EVs here.

Featured Image Credit: Unsplash