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Part 2: The Future is Electric – How Malaysia can Grow its EV Industry Within the Next Decade

In recent years, we have seen rapid acceleration of e-mobility around the globe, with the sales of electric vehicles (EVs) doubling in 2021 from the previous year to a new record of 6.6 million. The trend continued to show a strong increase in 2022 with 2 million sold in the first quarter, 75% higher from 2021.

The booming demand for efficient and low emission vehicles is expected to rise more significantly over the next decade as governments and countries continue to implement measures amid the rising prices of petroleum and at the same time navigating the solutions to addressing climate change.  

The road towards realising the full potential of electric vehicles (EVs) however would be a lot bumpier without the collective action by key stakeholders across the value chain. This includes the manufacturers, policy makers, property players and infrastructure providers all the way to day-to-day consumers.  

As a continuation from our first part article which discusses Malaysian Green Technology and Climate Change Corporation’s (MGTC) efforts to implement strategies under the Low Carbon Mobility Blueprint (LCMB), we continue our conversation with Huzaimi Nor Bin Omar, MGTC’s Senior Director of Technology Solutions Group to dive even further into the organisation’s perspectives on Malaysia’s journey towards e-mobility as the body developing this blueprint, as well as the importance of multi-stakeholder collaboration in accelerating this mission.  

1. Where does Malaysia stand in its journey towards an electric automotive future?

Huzaimi: Malaysia through both public and private participation has embarked on many initiatives to encourage the shift to electric mobility. However, there are still stumbling blocks along the way that need to be addressed mainly – lack of cohesive governance structure to fully support the whole EV ecosystem (in terms of regulations and standards), insufficient technology, and talent development to promote localisation of EV, low market penetration that is limited by consumers perception (range anxiety) and less affordable models available in the market as well as inadequate infrastructure development. 

To this date, Malaysia has 3,919 electric vehicles comprising of electric cars, electric motorcycles, and electric buses. The incentives announced in Budget 2022 are expected to kickstart EV adoption among the general public and the plans for government fleet electrification will further pave the way to instill public confidence and interest. Currently, there are various sandbox programmes conducted by government agencies and universities to test out technologies and accelerate technology commercialisation. 

These recent years have witnessed many players including the ministries, government agencies, universities and industries come into the EV sphere for technology R&D, infrastructure rollout, industry growth and strategic funding. All these efforts are driving the aspiration to achieve low carbon mobility. 

2. How ready are the Malaysian consumers to transition into a more electric society? What else can the country do to prepare its citizens for this change?

Huzaimi: Public awareness needs to be strengthened to encourage more users to switch to EVs. This includes continuously raising awareness on the benefits of EVs – particularly about its range and reliability, ensuring the readiness of infrastructure, and promote benefits including the current incentives offered for electric cars & charging stations. EV owners will be exempted from import and excise duty for imported Complete Built-Up (CBU) EV until 31 December 2023, and excise duty and sales tax for Completely Knocked Down (CKD) EV until 31 December 2025, and will get a personal tax relief of up to RM2,500 for the costs of the purchase, installation, rental, and subscription fees for EV charging facilities for income tax assessment year 2022 and 2023. Road tax exemption also applies to battery and fuel cells (hydrogen) EV until 31 December 2025. 

It is also important to ensure that the infrastructure such as public areas and homes are EV-ready while making sure that the technical expertise, after-sales support (service, maintenance, and vehicle parts) are established before more EV car models are brought in. The sales of plug-in hybrid vehicles (PHEV) are increasing in recent years with more than 30,000 PHEV cars now seen on the road. This is a promising improvement while we transition to battery electric vehicles (BEV). 

3. Who are the major stakeholders needed to make this transition a success? 

Huzaimi: An integrated and complete EV ecosystem comprises of many players covering the end-to-end value chain of EV. This includes power utilities and infrastructure providers, manufacturers (OEMs, component suppliers or vendors) battery suppliers, policymakers and regulators, EV-related industry associations, researchers, and environmentalists as catalysts for EV policy deployment, system integrators, and end-users.  

All these stakeholders need to work collaboratively to ensure the transition a success. Some examples of the key stakeholders:  

  • Government sectors – Ministry of Environment and Water (KASA), Ministry of International Trade and Industry (MITI), Ministry of Finance (MOF), Suruhanjaya Tenaga (ST), Economic Planning Unit (EPU), Ministry of Energy and Natural Resources (KeTSA), local authorities etc 
  • Power utility – Tenaga Nasional Berhad (TNB) 
  • Private sectors – PLUS, Sarawak Energy Berhad (SEB), etc 
  • OEMs – BMW, Hyundai, Mercedes, Nissan, etc 

4. How important is partnership between stakeholders to the success of this electric automotive future? 

Huzaimi: For electric mobility to be successful in Malaysia, all stakeholders need to leverage their role and have a coordinated approach to achieve a shared and clear vision/objective.  

Public and private partnerships need to be expanded to encourage knowledge-sharing, experience, resources, and expertise to accelerate a faster rollout of EVs. 

The participation of the private sector will accelerate the adoption of EVs as more resources such as funding, talent, and facilities can be tapped

5. How can the private sector be encouraged to invest in our country’s electric mobility future?

Huzaimi: Support from the government is crucial to encourage investment from the private sector via economic instruments such as incentives, tax exemptions, tax allowances, business matching, and others. Along with the introduction of incentives, it is expected the price of EVs will gradually be reduced and more people will start switching to EVs. 

Current economic instruments such as Green Income Tax Exemption (GITE) and Green Investment Tax Allowance (GITA) will spur the industry’s participation in green sectors. In addition to economic instruments, the provision of a friendly regulatory structure and long-term commitment by the government through sustainable business models will attract investment by the private sector. 

The participation of the private sector will accelerate the adoption of EVs as more resources such as funding, talent, and facilities can be tapped.  

These recent years we have witnessed more private sectors joining the EV scene in Malaysia. Automakers such as Hyundai, Mercedes, and BMW have introduced their new EV models here and technology providers such as Yinson have begun investing in e-mobility, autonomous driverless solutions, and charging points. 

We can look at Korea as an aspiring case study – Korean companies are to invest 60 billion won in the car technologies of the future over the next ten years, 41 billion won are borne by the Hyundai Group alone. The government will also provide 2.2 trillion won to support the private sector. According to the President of South Korea, the country aims to secure a market share of 10% in the global market for electric cars by 2030. 

6. What comes after transitioning to electric road transport?

Huzaimi: The first step is to get the mass public to accept, confide in and switch to EV from ICE and for the EV ecosystem to be well-equipped so as to attract investors and boost industry growth. The increase in EV adoption will lead to significant environmental impact with reduction in energy use and GHG emission, boost economic impact (fuel expenditure savings and return on value from the reduced GHG emission) and build on the societal impact (job creation and healthy environment).  

Following a smooth transition to EV, the country may then concentrate its talent pool, technology know-how and resources to become one of the key players in EV industry – regionally and globally. 

Overcoming the challenges will not be an easy feat but is one that is possible with consistent efforts and collective actions among key stakeholders. Research has shown that the elements to make EV a success are broadly similar market-to-market. It is united by the common themes such as range, cost of ownership, charging infrastructure, value chain potential and regulatory environment. As a country with about 32 million population made up of well-educated, middle-income earners and fairly young demographics, Malaysia, with the support of an extensive road transport network as well as a stable and secure energy industry, is well positioned to push the boundaries and be at the forefront of e-mobility. 

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