PETALING JAYA: Electric vehicle (EV) adoption in Malaysia is expected to remain on a gradual upward trajectory despite near-term volatility, as broader industry conditions settle following an unusually strong end to 2025.
While monthly sales may continue to fluctuate due to delivery cycles and policy shifts, underlying demand is seen holding firm, supported by expanding model availability and changing consumer preferences.
The sector is now transitioning into a more measured phase after a surge in deliveries previously, according to BIMB Research.
“The automotive sector entered 2026 in a consolidation phase after an exceptionally strong delivery cycle at the end of 2025, resulting in a broader normalisation of industry volumes,” the research house noted.
It said this cooling trend has been particularly visible in the EV segment, where early-year sales showed sharp swings.
“The decline in EV registrations during January and February 2026 was primarily driven by policy and timing factors, including the expiry of the completely built-up EV tax exemption in 2026 and the unwinding of year-end delivery pull-forwards, rather than a deterioration in underlying demand.” it observed.
Registrations fell from 8,123 units in December 2025 to 6,239 units in January and further to 3,635 units in February, marking a steep 42% month-on-month (m-o-m) contraction. However, the research house stressed that the weakness was temporary.
“Importantly, this decline did not reflect a collapse in underlying demand, but was largely cyclical in nature,” it said, pointing to a recovery in March where registrations rebounded about 30% m-o-m to 4,717 units.
Brand-level data reflected similar timing-driven distortions.
BYD and Tesla recorded strong rebounds of 87% and 135% m-o-m respectively in March, largely due to deferred deliveries. Meanwhile, BMW and Volvo also posted sequential gains from low bases, though volumes in the premium segment remained subdued.
In contrast, Proton’s e.MAS series saw a 32% m-o-m decline in March after a strong February, though volumes stayed elevated historically.
Other marques such as Xpeng, Mini and Chery recorded milder pullbacks, suggesting cautious discretionary spending rather than a structural demand shift.
On a yearly basis, EV adoption remains robust. Proton e.MAS deliveries surged 222% year-on-year (y-o-y), while Tesla rose 98%.
BYD slipped 14% y-o-y due to competitive pressures and shipment timing, while premium brands such as BMW and Denza declined sharply, reflecting sensitivity to financing costs and sentiment.
EV penetration also remained structurally higher, easing to 7.6% in March from 9.2% in January, but still well above historical norms.
BIMB Research noted that geopolitical tensions linked to Iran could weigh on demand through higher costs and weaker sentiment, particularly for premium vehicles.
Still, the research house said: “Despite near-term volatility, y-o-y trends continue to indicate structurally higher EV adoption, supported by localisation, expan-ding model availability, and shifting consumer preferences.”
Overall, BIMB Research maintained its 2026 total industry volume target of 740,000 units as the country’s automotive sector transitions into a more sustainable, replacement-driven cycle with limited near-term catalysts.
It reiterated its “neutral” stance on the sector, citing offsetting factors between demand pressures and new model launches.
The research house retained a “hold” call on Sime Darby Bhd
with a target price (TP) of RM2.46 and MBM Resources Bhd at RM5.28, while keeping a “sell” rating on Bermaz Auto Bhd with a TP of 68 sen.
Meanwhile, an analyst said EV demand in Malaysia is likely to remain resilient.
“What we are seeing is a timing mismatch between deliveries and registrations, which makes the monthly numbers look more volatile than the underlying trend actually is,” he explained.
“While policy changes and geopolitical uncertainties may temper sentiment in the near term, the shift towards more affordable, locally assembled EVs should continue to anchor steady growth in adoption,” he added.
