PETALING JAYA: Malaysia’s move to impose a price floor on fully imported new vehicles could reshape the electric vehicle (EV) market by encouraging more local assembly while limiting the entry of lower-cost imported models, say industry stakeholders and observers.
They said the RM250,000 price floor for completely built-up (CBU) vehicles could push more manufacturers to assemble vehicles locally instead under the completely knocked-down (CKD) programmes that entail local assembly, whether using imported or locally fabricated parts.
Malaysia Electric Vehicle Owners Club president Datuk Shahrol Azral Ibrahim Halmi said the policy currently applies only to new CBU models, meaning the impact will likely be phased.
“The impact will be gradual since existing EV models aren’t affected,” he said in an interview.
On the other hand, he added that limiting the entry of lower-priced imports could affect competition.
“Over time, this restriction will make the market less efficient since there will be fewer competing models, and might tempt CKD players to increase their prices,” he said.
“Consumers will have fewer choices and those that are available will not be as ‘value for money’ as they would have been.
“For example, car models may be loaded with accessories that give higher margins to the manufacturer, but are not that useful or desirable to the consumer,” he said.
In February, Investment, Trade and Industry Minister Johari Abdul Ghani said the government does not want Malaysia to become a “dumping ground” for “low-quality” imports, hence setting the threshold at RM250,000.
Malaysia’s EV market has grown rapidly since tax incentives were introduced under Budget 2022, with registrations rising from just 278 vehicles in 2021 to more than 46,000 by 2024.
Shahrol Azral noted that it would be better if there were more clarity on how the price floor was derived, and how “high quality” and “good technology” are defined, even as CKD cars have a hard time competing based on manufacturing cost due to lack of scale in our market.
