A potential price war in Malaysia’s electric vehicle (EV) segment is on the horizon, driven by global overcapacity and local policy shifts. Industry analysts caution that upcoming changes to tax structures and pricing regulations may reshape the competitive landscape significantly. Currently, Malaysia grants generous tax incentives for locally assembled EVs – or completely knocked down (CKD) units – including exemptions from import, excise, and sales duties until the end of 2027. Meanwhile, imported completely built-up (CBU) EVs also benefit from tax exemptions, but only until 31 December 2025. Post-2025, these units will be subject to full duties unless the exemptions are extended, an increasingly debated topic among stakeholders aiming to accelerate EV adoption. To safeguard domestic players, a minimum retail price of RM100,000 was also imposed on CBU EVs, effective until end-2025. With the global EV sector facing oversupply – highlighted by Geely Holding Group chairman Li Shufu’s remarks on “serious overcapacity” – Malaysia may soon witness the arrival of budget-friendly Chinese EVs, potentially triggering a pricing conflict. According to BIMB Securities analyst Sabariah Akhair, the approaching expiry of the RM100,000 minimum price policy represents a pivotal moment for the Malaysian EV ecosystem. She contends that if the government removes this price floor and extends tax exemptions for imported EVs beyond 2025, it could ignite a “full-blown EV price war”. Such a scenario would enable low-cost Chinese models like the BYD Seagull and Wuling Mini EV – priced between RM18,000 and RM45,000 – to flood the market. While consumers may initially benefit from these low-cost alternatives, Sabariah warned this may discourage investment from existing players lacking CKD scale or cost efficiency. She cautioned that the longer-term impact could include job losses, reduced localisation efforts, and stunted industrial growth. Conversely, if tax exemptions for CBU units are allowed to lapse while the RM100,000 price floor is lifted, she expects a more structured and sustainable market to take shape. Under this scenario, prices of imported EVs would gradually normalise, avoiding a race-to-the-bottom in pricing and allowing Malaysia’s localisation goals to progress. EV adoption may still grow at a moderate pace of 3.5 to 4 per cent of total industry volume (TIV) by 2025, supported by clearer policies, robust charging infrastructure, and accessible financing. In the first quarter of 2025, EVs made up 2.9 per cent of Malaysia’s TIV, up from 1.8 per cent in 2024, according to the Malaysian Automotive Association (MAA). An industry observer involved in EV distribution echoed similar sentiments. He noted that once tax exemptions for imported EVs expire at the end of 2025, CBU models will become less viable due to rising prices, potentially causing a dip in sales. However, the concurrent removal of the RM100,000 price floor may encourage the entry of more budget models. He also remarked that internal combustion engine (ICE) vehicles will remain relevant for some time, particularly as consumers grapple with limited charging infrastructure and range anxiety. Range-extended EVs (REVs), popular in China, offer a potential solution, though they currently receive no tax incentives in Malaysia. The observer further expressed scepticism about whether Chinese ICE vehicles could surpass traditional incumbents in performance, stating that they still fall short in key driving metrics. Meanwhile, Sabariah believes established distributors such as Bermaz Auto Bhd (BAuto) and Sime Darby Bhd are well-positioned to withstand intensifying competition. Both firms have strategically expanded their EV portfolios in anticipation of changing market dynamics and evolving consumer expectations. However, she acknowledged that some market share erosion could occur in the near term, particularly in the B and C-segment passenger vehicle categories, where Chinese brands are most aggressive. Nonetheless, both Sime Darby and BAuto have laid the foundation for long-term resilience through proactive positioning and robust planning. On the national front, Sabariah highlighted that Proton and Perusahaan Otomobil Kedua Sdn Bhd (Perodua) remain structurally strong and capable of defending their market share despite new entrants. Proton has made a notable move into the EV space with the launch of the e.MAS 7, which has emerged as the most registered EV in early 2025. Backed by its partnership with Geely and the ongoing development of the Automotive High-Tech Valley (AHTV) in Tanjung Malim, Proton is actively developing a vertically integrated EV ecosystem. This localised approach could lower production costs and offer the flexibility needed to compete with CBU imports. Perodua is expected to debut its first EV by the end of 2025, aimed at the sub-RM100,000 segment. Unlike rebadged alternatives, this model is reportedly built from scratch, enhancing consumer confidence in its brand and engineering. The planned adoption of a Battery-as-a-Service (BaaS) model – where batteries are leased rather than sold – could improve affordability and distinguish Perodua from less trusted foreign offerings. Sabariah stressed that both national brands benefit from strong brand loyalty, extensive dealership networks, and long-standing government backing. Despite the looming pricing pressure from Chinese EV imports, their strategic focus on CKD localisation and cost efficiency should enable them to remain competitive. The industry observer added that by 2026, Chinese EV manufacturers seeking to maintain tax incentives will be required to initiate CKD operations in Malaysia. However, due to volume limitations, this may not be feasible for many. He believes Perodua’s sub-RM100,000 EV may be unaffected by the influx of Chinese competitors, while Proton’s alliance with Geely positions it more favourably than CBU-only Chinese brands lacking local manufacturing operations. -The Star
