AS a Malaysian, driving to your local lunch spot is the norm even when the restaurant is only five minutes away. We are a nation constantly on the move, connected by vehicles and road transport.
With one of the highest car ownership rates in Asia, it’s no surprise that transport is the second largest contributor to greenhouse gas emissions (GHG).
There is an urgency to address transport-related emissions and mitigate environmental challenges – a key theme outlined in the National Energy Transition Roadmap (NETR).
The NETR identifies green mobility as a key driver of change. It highlights transport electrification as a way to decarbonise, but also provide job opportunities in resilient green industries as we transition beyond the traditional automotive manufacturing sector.
Malaysia’s automotive industry today contributes a significant 4% of gross domestic product (GDP), and employs more than 700,000 individuals. That’s why it’s imperative that we make strides towards adopting green mobility practices and technologies while building our talent and capabilities for the transition.
One way to do this is by fostering domestic demand for electric vehicles (EVs). With increased EV adoption, we can enjoy better air quality, reduced emissions, and new job opportunities.
Setting the stage
Globally, EVs are steering nations towards a cleaner future – bringing the transportation and the energy sectors closer together.
With the implementation of the NETR, Malaysia has the right foundations in place to operationalise a low-carbon transport ecosystem.
The NETR outlines Malaysia’s goal of driving 80% adoption of EVs, achieving 90% local EV manufacturing, and enhancing ICE fuel efficiency by 2050.
The Ministry of International Trade and Industry (MITI) has established the National EV Task Force (NEVTF) to promote the adoption of EVs, expand EV charging infrastructure nationwide, and drive investments within the EV ecosystem.
MITI also launched the national EV steering committee (NEVSC) under the purview of the NEVTF to fast-track the development of Malaysia’s energy-efficient vehicle (EEV) ecosystem.
The NEVTF has driven promising improvements, such as TNB’s Greenlane for EV charging stations (EVCS), Suruhanjaya Tenaga’s EVCS guidelines and EV charging point operator (CPO) licensee process, and KPKT’s EV charging bay guidelines.
Overcoming bumps on the road
Before we can reap the benefits of an EV ecosystem, we must first address four key levers that hinder Malaysia’s electrification progress: accessibility to charging infrastructure, EV affordability, dedicated governance, and a funding mechanism.
The International Trade Administration, an agency in the US Department of Commerce, has identified high costs and inadequate supporting infrastructure, amongst other factors, as key barriers to developing Malaysia’s EV ecosystem.
> Charging infrastructure: There are five archetypal use cases of EV charging infrastructure: home, workplace, depot, (semi) public destination, and public en-route.
These use cases can be grouped into two simple categories: public and private charging stations.
In the first phase of the NETR, Malaysia plans to implement an EV charging stations catalytic project, championed by MITI in collaboration with GLCs and private sector players. It aims to install 10,000 EV charging stations across the nation by 2025.
Besides public charging stations, there is also a need to increase installation of private charging stations.
As such, the second phase of the NETR addresses private charging needs to further encourage the adoption of EVs.
The NETR also outlines the government’s plans to reduce regulatory challenges, such as right-to-charge regulations and a review of Uniform Building By-Laws.
We can also take inspiration from European regulations, such as installing charging stations every 60km along major highways and providing ad-hoc payment methods via cards or ewallets.
> EV affordability: A lack of infrastructure isn’t the only barrier to EV adoption. Premium prices of imported EVs play a significant role as well.
In Malaysia, where 77% of vehicles are priced under RM100,000, the drive toward achieving the NETR’s ambitious goal of 80% EV total industry volume (TIV) by 2050 hinges on affordability.
Currently, most imported EVs are priced above RM100,000, and can cost as much as RM2mil.
Fortunately for Malaysians, local car manufacturers have strong potential to accelerate their efforts, with plans to launch a home-brand EV as early as 2025.
Manufactured under a local brand appealling to Malaysian consumers, these national EV car brands could foster a sense of pride and ownership for the transition to greener mobility.
With the NEVTF driving the charge, initiatives like the NEVSC, EVCS, and charging bay guidelines will speed up infrastructure development.
> Dedicated governance: Down the road, the Malaysian government should consider converting the NEVTF into a dedicated unit within MITI.
By having a single governing body driving the development of Malaysia’s EEV ecosystem, we will have a single point of contact that fosters coordination across stakeholders while offering enhanced clarity to the private sector.
Additionally, centralising mandates within this unit is expected to expedite the regulatory process – facilitating better orchestration of government resources.
A dedicated unit to manage the EEV ecosystem will also reinforce accountability, bolstering efforts to drive the development and deployment of a cohesive EV ecosystem in Malaysia.
> Funding mechanism: Significant funding will be required to accelerate the transition across automotive manufacturers, charge point operators (CPOs), and end users.
In the realm of CPOs, “first mover disadvantage” slows down infrastructure rollout as initial CPOs must invest in electricity supply infrastructure to enable others to easily add their charging points – requiring incentives to mitigate this disadvantage.
Additional incentives – such as leasing incentives, tax rebates, and road tax and insurance waivers – can further encourage EV adoption in Malaysia.
Given the need for funding balanced against the need for a balanced fiscal budget, the government can channel savings from targeted fuel subsidies to finance these EV incentives.
In the long-term, this will lead to sustainable outcomes, with creation of jobs in resilient green sectors, and eliminate the need for fuel subsidies.
Public transport electrification
In the push for sustainable transportation, the electrification of public transport is equally as important.
Electric buses offer a promising path to unlock energy savings along with GHG reductions.
With aspirations to boost the share of public transport usage, and need for a growing fleet, electrification becomes even more important.
In Malaysia, the electrification of buses is poised to lead the way, with potential to soon achieve total cost of ownership (TCO) parity with internal combustion engine (ICE) vehicles – marking a significant milestone in Malaysia’s green mobility efforts.
Malaysia’s success in implementing these imperatives will put us on par with similar Asean countries such as Thailand and Indonesia. These neighbouring nations have already taken bold steps toward electrification.
Malaysia must focus on its own imperative to facilitate a just transition toward EVs, and in doing so generate fresh employment opportunities – fostering green economic growth within the country.
The article is authored by Boston Consulting Group partner and associate director Andrey Berdichevskiy, Boston Consulting Group project leader Yung Shen Ow, and Zero Emission Vehicle Association (ZEVA) president Wan Ahmad Zam Zam Wan Abd Wahab.