Electric dreams: What is needed to accelerate EV growth in Malaysia?

Malaysia needs a massive shift towards electric vehicles to decarbonise its transport sector and achieve its goal of becoming a carbon-neutral nation by 2050. However, high vehicle prices and a lack of infrastructure are hampering efforts. Malaysia needs a long term and sustainable solution to develop its e-mobility ecosystem, say analysts.

EVs in Malaysia
Malaysia will need to invest heavily in infrastructure to support its shift to EVs. Image: Raja Aiman / Eco-Business

Datuk Dr. Abdul Ghaffar Ramli remembers the day he drove his wife, daughter and sister-in-law in his all-electric Renault Zoe to a wedding in Serendah, a township in the Malaysian state of Selangor. It was in 2019 and he had just purchased the car second-hand. The journey from his home in Bangi and back again would cover 180 kilometres, well beyond the 140 km range of his electric car.

He stopped at a public charging station to top up the battery before proceeding to the wedding. On the way home, Ghaffar didn’t want to disturb his passengers who were all asleep, so he skipped pass a charging station and drove straight on.

As they trundled back to Bangi, the Zoe gave two low battery warnings. He barely made it home that evening, with just a 3 per cent charge left in his car.

“I drove the last two kilometres without air conditioning [to conserve battery power],” said Ghaffar, 68, who is a member of the Malaysian Electric Vehicle Owners Club.

The former director general of STRIDE (Science & Technology Research Institute for Defence, an agency under Malaysia’s Ministry of Defence) told Eco-Business that there were a couple of similar incidents where he almost ran out of battery. Once, his car even went into “turtle mode”, which limits how fast the car can go to maximise range.

Although Ghaffar puts down these experiences more to his overconfidence in the range of his electric car, he thinks Malaysia does not have enough public electric vehicle (EV) charging stations, which are vital to increase widespread use of EVs and alleviate “range anxiety”. They could also help prevent the close calls he had of being stranded.

Most Malaysians agree. A study revealed that the greatest concern Malaysians have regarding battery powered EVs is the lack of public chargers.

According to Datuk Hanafi Sakri, senior director at the Malaysian Ministry of International Trade and Industry (Miti), Malaysia has about 900 EV charging stations, as reported by Edgeprop. In comparison, neighbouring Singapore, currently has 3,600 charging stations to support a much smaller population and size.

The majority of Malaysia’s charging stations are located in the Klang Valley – which covers the capital Kuala Lumpur and its surrounding cities and towns in Selangor – and major urban areas along the west coast of peninsular Malaysia.

Ghaffar calls the east coast of peninsular Malaysia an “EV desert”, where charging stations are few and far in between. The situation is similar in the Malaysian states on Borneo island. A check by Eco-Business using the PlugShare app (a public platform that keeps track of the number of charging stations as reported by users) revealed that at the time of writing, there are 15 stations in Sarawak and only one station in Sabah.

Barriers to adoption

Besides insufficient EV charging infrastructure, there are several other obstacles standing in the way of boosting the number of electric vehicles on Malaysian roads.

Despite Malaysia being on the cusp of becoming a high-income country and government tax breaks offered on electric vehicles, EVs are still too expensive for most. The cheapest EV on sale, the China-made Ora Good Cat by Great Wall Motors, is priced at around RM140,000 (US$31,728), putting it out of range for many individuals.

Locally assembled or locally produced EVs would bring prices further down and provide consumers with more options, but both of Malaysia’s national car makers – Proton and Perodua - currently do not have fully electric vehicles in their model line-up.  

Petrol is cheap in Malaysia due to long-running government subsidies, providing less incentives for Malaysians to switch to EVs. In 2022, Malaysia had the lowest petrol prices in the Asia Pacific (APAC) region.

According to Ghaffar, the cost of using newer public DC charging stations can also be costly. “Some public charging stations charge by the kilowatt hour, which is okay. But some of them charge by the minute. That is going to cost RM2 (US$0.45) per minute, depending on how fast your car takes it. It is just too much,” said Ghaffar.

Push from the Government

Electrification is widely seen as the most viable way to decarbonise Malaysia’s transportation sector and help the country achieve its ambition of becoming net-zero by 2050.

But massive investments are needed in the EV sector to meet that target. According to the 1.5°C scenario of the Malaysia energy transition outlook report by the International Renewable Energy Agency (IRENA), 76 per cent of all road vehicles in Malaysia will need to run on electricity by 2050. 

EV charger in KL

A car being charged at a public EV charging station in Kuala Lumpur, Malaysia. Increasing the number of public chargers is key to attracting more EV users in Malaysia. Image: Raja Aiman / Eco-Business.

The report also projects that 1.3 million charging stations need to be installed in the country by 2050 to support the estimated 38 million electric vehicles in Malaysia. In the nearer term, IRENA estimates Malaysia needs 150,000 public charging stations by 2030, which requires an investment of US$3.7 billion.

Under the Low Carbon Mobility Blueprint, the Malaysian government plans to install 10,000 charging stations by 2025 and to have hybrids and EVs account for at least 15 per cent of the total industry volume by 2030. In 2022, there were over 15,000 units of plug-in hybrids, hybrids and full electric vehicles on the road in Malaysia.

The Malaysian government has recently cranked up efforts to encourage EV uptake.

During the revised budget tabled in 2023, the Malaysian government introduced three new measures to spur EV growth. Tax exemptions (zero excise and zero import duties) on fully imported EVs and locally assembled EVs were extended for another two years until 31 December 2025 (for fully imported EVs) and until 31 December 2027 (for locally assembled EVs). There was also tax break extensions for components for locally assembled EVs.

In a study by Maybank, analyst Liaw Thong Jung said that the most significant move in the revised budget was the longer tax breaks given to locally assembled EVs. According to Liaw, this move will attract new investments for CKD (completely knocked down, or locally assembled) EVs in Malaysia, help keep Malaysia’s automotive segment relevant to the fast changing landscape and facilitate building an EV ecosystem.

There is a huge ecosystem waiting to be developed, including setting charging standards, manufacturing batteries and developing charging systems. Keen to tap into the growing market, Petronas’s clean energy subsidiary Gentari and national energy utility company Tenaga Nasional Berhad have recently provided charging services to EV owners.

Malaysia needs to formulate a long-term, sustainable agenda to develop the e-mobility ecosystem.

Liaw Thong Jung, analyst, Maybank

Datuk Phang Ah Tong, chairman of Malaysia Automotive, Robotics and IOT Institute (MARii), an agency under the Ministry of International Trade and Industry, believes Malaysia has an advantage in developing EV critical components and systems locally.

“I think we are very strong,” said Phang. “If you want to develop the critical components and systems manufacturing locally, more effort is required to specifically spur companies. It has to go beyond tax breaks and giving the firms Pioneer Status. The enablers must all be present.”

Pioneer Status is an incentive in the form of tax exemption in Malaysia, which is granted to companies participating in state-promoted activities and sectors.

Coming on the heels of EV-related perks announced by the government was another potentially promising development. In March 2023, the Malaysian government granted US EV giant Tesla approval to import its battery electric vehicles (BEV) into Malaysia.

The move was part of the country’s BEV Global Leadership initiative which aims to boost electric vehicle demand in Malaysia. Under the programme, Tesla will set-up a head office, sales centre and service centre in Malaysia. It will also install its ultra-fast chargers, hire local workforce, train students, collaborate with academic institutions and work with local companies to develop the ecosystem for charging infrastructure.

Sustained effort needed

While Tesla’s entrance into the Malaysian market is positive in the short term, more measures are needed to keep electric vehicles viable into the future.

“Malaysia needs to formulate a long-term, sustainable agenda to develop the e-mobility ecosystem,” noted Liaw in his report.

How can EVs gain more traction in Malaysia?

Ghaffar thinks that besides lowering the price of EVs, removing petrol subsidies could also be a good start to push Malaysians towards electric vehicles.

He said Malaysia could also introduce off-peak electricity tariffs for domestic users. It could translate into cheaper EV home charging at night, and shift fence-sitters to adopt EVs.

In addition to policy and regulations, Ghaffar thinks that to entice Malaysians to adopt EVs, more effort is needed to spread awareness about the benefits of electric vehicles – and there are many.

Besides being quieter and emitting no harmful pollutants, perhaps the biggest appeal of electric vehicles is that they are cheaper to maintain compared to ICE (internal combustion engine) vehicles – there are no spark plugs, oil, filters or belts to change. Brake pads also last longer due to regenerative braking.

Ghaffar estimates that a ICE vehicle would cost him RM1,000 (US$226) to service at the 10,000 km service interval. “With this [EV] car, it cost me RM200 to service at 10,000 km,” he said. He also dismissed fears about short battery life. He said his 9 year-old Renault Zoe still has over 80 per cent battery capacity.

According to Phang the EV market in Malaysia right now is still very much “policy-driven” and incentives need to be present in the market to drive adoption, given that without subsidies, the profitability of the sector right now is still very low.

He said that with the EV push, there is also a need to holistically evaluate and review the National Automotive Policy (NAP) to ensure alignment.

Phang said that the internal combustion engine market players are going to be nudged out as it is inversely related to EVs gaining in momentum. The government needs to make sure that phase-out is done properly. Phang added: “The talent has to be right, the players have to transition.”

Liaw came to a similar conclusion about the future of the Malaysian automotive sector. As he noted in the Maybank research report: “The transition from ICE to EV is an irreversible megatrend.”

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