Reasons and challenges for slow EV adoption rate in Malaysia

Discussions around electric vehicles (EVs) have increased in recent times. It is widely accepted that electric vehicles can be a way to reduce the impact of global warming through cleaner technology and phasing out greenhouse gas emissions.

Our neighboring countries SEA have already taken several steps forward in the race for electric vehicles, with Thailand and Vietnam ramp-up of production, and Singapore soon tax reduction for electric vehicles as well as stopping registrations of diesel cars and taxis.

Seeing these developments, we have to ask ourselves: what about Malaysia? Why are we still delaying doing the same?

1. Unclear implementation objectives

Launched in February of last year, the National Automobile Policy 2020 (NAP2020) lacks details. The plan has not been established incentive details for industry players and was grouped together with other types of fuel-efficient vehicles (EEV).

The PAN painted broad strokes with 5 key objectives:

  • Development of a technological ecosystem of new generation vehicles (NxGV),
  • Expansion of the Mobility-as-a-Service (MaaS) sector,
  • Help the national automotive industry to cope with IR4.0,
  • Ensure that the global ecosystem has benefited from the NxGV ecosystem, and
  • Reduce carbon emissions.

Despite having touched on 7 roadmaps and plans to be achieved by 2030, Malaysia still does not have clear milestones to track our progress. Maybe we can follow in the footsteps of major ASEAN countries including Thailand, Indonesia and Singapore.

Thailand, for example, set a target in 2015 of creating 1.2 million electric vehicles by 2026. In addition, it also planned to cover the areas of industrial incentives, standards, infrastructure and prices. charging, etc. by 2036.

Indonesia seeks at least electric vehicles 20% of its total production by 2025, including 2,200 electric vehicles, 711,000 hybrids and 2.1 million electric motorcycles.

For Singapore, its 2020 budget aimed to phasing out of gasoline and diesel vehicles by 2040. Come budget 2021, his government has allocated S $ 30 million (around RM92 million) over the next 5 years for initiatives related to electric vehicles, including the construction of additional charging stations.

Given the lack of clarity on the development of electric vehicles in Malaysia, industry players overseas are reluctant to invest here. This brings me to my next point.

2. Too much focused on building gasoline cars

Malaysia is still heavily focused on manufacturing cars powered by internal combustion engines, and Hyundai, a major foreign player that has invested in EV technology, will even move its regional headquarters from Mutiara Damansara in Indonesia.

Hyundai is also already construction of a small-scale electric vehicle 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 (approximately RM 8 billion) to develop electric vehicles in Indonesia from 2019 to 2023.

Toyota Chairman Akio Toyoda said in a statement, “Since the Indonesian government already has an electric vehicle development map, Toyota sees Indonesia as a prime destination for electric vehicle investments. ” That says a lot about the insufficiency of our aforementioned NAP2020.

Vietnam is also joining the race, with local automaker VinFast revealing 3 new electric SUVs he plans to build this year.

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

Automakers who have already invested in Malaysia are now criticizing the lack of progress. Once again this week, Mercedes-Benz Malaysia said it remains committed to its EV strategy but needed a more defined industry roadmap for it to do.

3. No subsidy for consumers who buy electric vehicles

The exorbitant cost of electric vehicles may prevent Malaysians from making the switch just yet. Take the example of Tesla’s Model S with its price tag over RM650,000. This makes adoption almost impossible for the general Malaysian M40 public.

More economical options come in the form of Renault Zoe and Nissan Leaf, starting at RM145.888 and RM180.566 in the local market respectively. With such tariffs, electric vehicles are the most accessible to those in the T20 segments, especially without government incentive to make the switch.

According to a survey conducted by Rakuten Insight in 2019, approximately 65% of Malaysian respondents said the tax breaks would encourage them to buy an electric vehicle. In addition, the availability of nearby charging stations would also encourage around 56% of Malaysians surveyed to buy an electric vehicle.

Malaysia can look to countries like Norway for ideas, which have seen a sharp increase in 2020 for electric vehicle purchases. To increase demand, the government provided Electric vehicle drivers with a 90% reduction in road tax.

Although the NAP omitted any mention of tax incentives or tax breaks for electric vehicles, MITI Deputy Minister Ong Kian Ming said those details had not yet been finalized.

“Incentives will be discussed in one of the 7 roadmaps that we are rolling out, and everything will be put into context within the Automotive Business Development Council (ABDC) where all incentives are discussed with all stakeholders,” said he declared. . Therefore, we can only wait for more updates at this time.

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 electric vehicles. In an article by The edgeMalaysian Institute of Automotive, Robotics and IoT (MARii) CEO Datuk Madani Sahari said Samsung SDI’s plant in Negeri Sembilan produces lithium cells for electric vehicles.

Since Malaysia is already behind the game, NanoMalaysia CEO Rezal Khairi Ahmad suggested that we focus on building components rather than the EVs themselves. NanoMalaysia itself is the first building a completely local hybrid car.

He recommended that the country not focus exactly on securing foreign direct investment (FDI) from major automakers to set up assembly lines here, either. Even though assembly plants will produce high-value products, the jobs created will always be poorly paid, 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 talent, will create more well-paying jobs than assembly plants.

Reaffirming that EVs can only cater for a small market segment, especially the country’s T20, Rezal added, “So we need to think differently to become a high-value EV economy by looking at components, rooms. We design, develop and produce. We may not be able to address these issues in Malaysia, but we will be able to export to our neighboring markets in Asean and beyond. “

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Although Malaysia has already lost the game in attracting FDI from well-known brands, we can still have hope in the form of Proton. The Malaysian carmaker was acquired by Chinese Geely in 2017, which also has its own fully electric car, the Emgrand EV.

Based on statements by Proton Edar CEO Roslan Abdullah in August 2020, however, it doesn’t look like Proton is making any moves in the EV scene any time soon.

He cited the disparity between the huge investments required and the returns EVs would produce at the moment being something that was not commercially viable for Proton, hence their reluctance. In addition, he said consumers need to be better informed first and more charging stations should be installed before the electric vehicle market can develop here.

Clearly, government agencies will need to have further discussions with relevant stakeholders on the appropriate strategies that can actually boost the adoption of EVs in Malaysia, and possibly even boost its production locally.

  • You can read more articles we have written on electric vehicles here.

Featured Image Credit: Unsplash

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