Malaysia can lead EV charge

Estimates by McKinsey Centre for Future Mobility (MCFM) indicate that achieving Malaysia’s 2030 goal could translate into a revenue pool of RM20bil for domestic demand alone.

MALAYSIA’S strengths in electronics component manufacturing and domestic vehicle assembly, for which it has a well-developed ecosystem, can make the country a key player in the fast-growing electric vehicle (EV) industry in South-East Asia.

In 2023, EV sales in Malaysia quadrupled to over 13,000 units. They, however, made up less than 2% of new car sales, compared to 18% in Singapore and 12% in Thailand.

The government is working to power up the EV market, with plans for 10,000 public chargers by 2025; it has also exempted EVs, both imported and locally assembled, from a range of taxes and duties.

The goal is for EVs to account for 15% of vehicle sales by 2030 and 38% by 2040.

Moreover, private investment is growing, with more than RM26bil investments approved between 2018 and June 2023 for EV assembly and components manufacturing.

Estimates by McKinsey Centre for Future Mobility (MCFM) indicate that achieving Malaysia’s 2030 goal could translate into a revenue pool of RM20bil for domestic demand alone.

Multiple EV brands have been launched in Malaysia, a further testament to this industry’s growth.

More can be done, of course, to accelerate the transition to EVs, including helping customers use EVs and making the industry more valuable.

To support consumers, these steps could be taken:

Alleviate charging (refuelling) anxiety. A sizeable portion of charging EVs happens overnight at homes and apartment complexes as well as at offices. This could require the installation of three-phase wiring and higher-voltage connections to accommodate the load of EV charging.

In addition, public charging infrastructure needs to be scaled up across the nation to keep pace with this EV transition. As of the end of June, Malaysia had fewer than 2,600 public charging points.

Develop ecosystem services, beyond charging. Innovative pre- and after-sales services are also essential to create a seamless journey throughout the vehicle ownership life cycle while creating opportunities all along the value chain.

These services could include EV-specific financing and leasing schemes that could address high upfront costs; EV insurance providers; and maintenance services such as battery servicing and replacement.

An ecosystem of services could also help different players, from existing companies to new ones and start-ups, work together. This could create new opportunities in the value chain.

Become a hub for EV components. To create more value in the EV industry, Malaysia could seize the opportunity to become a hub for EV components. Malaysia is already the 10th largest electrical and electronics exporter in the world.

As the EV industry expands, so could the demand for electrical and electronic components grow exponentially — for instance, EVs have at least twice as many semiconductors as an internal combustion engine car.

By working with EV manufacturers, both foreign and domestic, local players could use Malaysia’s strong position to become a key component supplier to meet domestic, regional and global demand.

This could potentially enable automotive original equipment manufacturers, both here and abroad, to launch EVs in Malaysia to further put the country on the map as a producer and assembler of EVs.

The two national carmakers, Proton Holdings Bhd and Perusahaan Otomobil Kedua Sdn Bhd, are also working towards developing affordable EVs that could hit the market as early as 2025.

Here is one more thing to think about: While Malaysia has great potential, other countries in the region are also working hard to find their place in the emerging EV economy, which could be worth roughly US$50bil in sales by 2030, according to MCFM estimates.

Vietnam is already producing its own EV, and Thailand and Indonesia are major automotive manufacturing hubs with sizeable incentives and international investments in automotive and battery ecosystems respectively.

Malaysia’s RM20bil EV opportunity is real; indeed, that figure could be conservative.

But it will not just happen. The race is on.