EV theme set to further develop


KUALA LUMPUR: Demand for electric vehicles (EVs) is expected to pick up this year, spurred by duty exemptions and better overall operating operations for automotive companies.

MIDF Research in a report yesterday said new EV model introductions and planned launches have been picking up pace since the introduction of the duty exemptions for EVs under Budget 2022.

“This is a positive catalyst in building demand for EVs and the supporting infrastructure. It is a step forward towards addressing the under-representation of EV brands and models in the domestic market.”

The research house said the revision in EV selling prices post-duty exemptions, which is estimated at between 3% and 18%, is also a positive development.

“Although admittedly, there is still some way to go to make EVs accessible to the domestic mass market.

“We expect the electrification theme to further develop over the next few years. A wider offering of EV models, advancements in battery technology as well as scale created in the more advanced EV markets is expected to bring down the cost of EVs, going forward.”

Meanwhile, Malaysia Automotive, Robotics and IoT Institute chief executive officer Datuk Madani Sahari said the government is determined to spur the development of EVs in Malaysia.

“Through the National Automotive Policy 2020, Malaysia has developed a formidable ecosystem of automotive component suppliers and relevant talent that are ready to take the next step into the EV domain,” he told StarBiz.


He added that the policy has established a roadmap towards the holistic development of critical components and technologies.

“This adds to the already rich infrastructure to accommodate design, smart manufacturing and component development for EVs through various centres of excellence established by the government over the last decade.”

Additionally, Madani said numerous Malaysian standards and regulations have been established for EVs to ensure that vehicles produced from Malaysia are compliant with global safety standards.

“This includes safety requirements for electric powertrains of road vehicles, as well as standards to encourage battery swapping, wireless charging and the recycling and disposal of batteries.

“This ecosystem would be of great benefit to original equipment manufacturers (OEMs) looking to assemble vehicles of global standards as their local or regional hub for EVs.”

To support the development of a domestic EV industry, the government announced during the tabling of Budget 2022 in October last year that it would provide full exemptions on import and excise duties and sales tax, as well as road tax (up to 100%) for EVs.

Individual income tax relief of up to RM2,500 will also be given on the costs of buying, installing, leasing or repayments of EV charging facilities.

Additionally, the government announced in Budget 2022 that the sales and services tax exemption, which is 100% for locally assembled or completely-knocked-down passenger vehicles and 50% for imported or completely-built-up passenger cars, has been extended till June 30, 2022.

At a press conference last week, Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad said the tax exemption on EVs has stimulated interests of OEMs to invest in Malaysia.

She said a total of 274 units of EVs were sold in Malaysia last year, adding that sales “will be a lot higher” in 2022.

Separately, MIDF Research said it expects vehicle sales to grow by “double-digits” this year.

“Notwithstanding the hiccups in production recovery during the final quarter of 2021, we expect the majority of car players to ramp up production in 2022 to meet the extended outstanding bookings of up to six months, considering excellent progress of the national vaccination programme so far.”

The research house is projecting vehicle sales to grow between 12% and 14% year-on-year to between 570,000 units and 580,000 units this year.

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