CIMB Research expects national brands to capture a larger share of EV sales in 2026.
PETALING JAYA: Malaysia’s electric vehicle (EV) market is expected to see subdued activity in 2026, as analysts and industry observers caution that low petrol prices and limited incentives will continue to constrain wider adoption.
Veteran automotive journalist Yamin Vong said Malaysia has already benefited from four years of tax-free EVs, but the gains were largely concentrated among higher-income buyers and early adopters.
“We had a four-year tax-free run for EVs,” he said, adding that “these people who enjoyed it very much were mostly the people who can afford and the early adopters.”
Before Jan 1, 2026, EVs registered in Malaysia were exempted from excise duty and import tax as part of the government’s push to promote EV adoption. The tax exemptions, announced under Budget 2022, were in effect from Jan 1, 2022 to Dec 31, 2025.
Despite these incentives, EV penetration remains modest, accounting for about 5% of total industry volume (TIV) last year.
Vong said wider adoption will hinge on affordability, particularly through national brands and locally assembled models, noting that the entry of Proton’s EVs and upcoming completely- knocked-down (CKD) production by Chinese automakers will lift sales, albeit gradually.
However, he stressed that structural factors continue to limit mass-market demand.
“At the end of the day, there’s no compelling reason for you to buy an EV, particularly with subsidised petrol prices,” he said.
Meanwhile, CIMB Research expected near-term support for overall car demand – for both EV and internal combustion engine (ICE) vehicles – in the first half of 2026, following the deferral of the open market value (OMV) revision and front-loaded EV inventories ahead of the expiry of tax exemptions for completely built-up (CBU) EVs.
“The Malaysian automotive industry is recalibrating in 2026 following the expiry of the 100% import and excise duty exemption for CBU EVs, which had been in place since 2022,” the research house said.
CIMB Research noted that official prices for popular EV models such as the BYD Atto 3, BYD Sealion and Xpeng G6 have remained unchanged.
Tesla Malaysia has also indicated that prices for its Model 3 and Model Y will remain unchanged from 2025 levels, it added.
“We believe this reflects front-loaded EV inventories that entered Malaysia before Dec 28 2025, ahead of the tax holiday deadline,” CIMB Research said.
“Our channel checks suggest major EV players, including BYD, Xpeng, and Proton e.MAS, have secured sufficient inventory to meet demand over the next three to six months.”
That said, the research outfit said some players may still face price adjustments during this interim period owing to “gaps in locally assembled model availability.”
CIMB Research expected national brands to capture a larger share of EV sales in 2026 following the launch of Proton’s e.MAS 5 and Perodua’s QV-E, as locally assembled EVs continue to enjoy tax exemptions until 2027.
The research house noted that the Finance Ministry’s decision to defer the OMV revision to July 2026 from January will provide temporary relief, particularly for non-national brands with higher exposure to locally assembled vehicles.
“Overall, front-loaded EV inventories and the OMV deferral should provide near-term support for non-national vehicle demand in the first half of financial year 2026,” it said.
Nevertheless, the research house maintained a “neutral” call on the sector, citing subdued growth outlook amid intensifying market competition.
Vong expected overall industry demand to soften following an exceptionally competitive 2025, which saw aggressive price cuts particularly by non-national brand marques thanks to an influx of low-cost Chinese models.
Vong expects TIV to weaken in 2026, though not sharply.
“TIV will drop this year. It will weaken, but it won’t register a double-digit drop nor will it register double-digit growth.”
