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 yesterday.
On the other hand, he added 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 could also see fewer value options.
“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 as the country develops its EV ecosystem, hence the policy to set 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.
Universiti Teknologi PETRONAS Centre of Automotive Research and Electric Mobility researcher Mohd Syaifuddin Mohd said the policy could strengthen Malaysia’s EV ecosystem if it encourages higher standards and local industry participation.
“We are already seeing early signs with Perodua developing its first EV with local vendors, while Proton’s EV push may attract more EV component activities into Malaysia,” he said.
This could create opportunities for local suppliers, engineers and universities in research and talent development, he added.
However, Mohd Syaifuddin said affordability remains key to broader EV adoption.
“In the short term, restricting lower-priced EV imports could slow mass-market adoption, as affordability remains a key concern for many Malaysians."
Policy analyst and economist Dr Geoffrey Williams described the policy as protectionist and warned it could be anti-competition.
“Protectionist policy implies that consumers have less choice, prices are held up except for local models, local companies have a protected market share, leading them to beless innovative and efficient,” he said.
Williams also said the policy denies many Malaysians from having cheaper EVs.
“As far as EVs are concerned, cheap EVs are kept out and consumers only have a choice of more expensive models, so those on lower incomes cannot afford them,” he said.
