Situation of Electric Vehicle in Malaysia before GE 15.

Compared to other ASEAN countries, Malaysia introduced policies supporting EVs relatively early. Malaysia’s policy supports EVs due to a set of mixed motives, including environmental, energy, and industrial policy considerations. EV support was put on the political agenda when the country launched its National Green Technology Policy in 2009. This policy rests on four pillars, representing energy, environmental, economic, and social considerations. This indicates that EV support is regarded as a part of a larger transformation towards a sustainable economy and society. As such, the transformation cuts across various political areas, and Malaysia set up Greentech Malaysia, a subsidiary organisation under the Ministry of Energy, Green Technology and Water, to promote this process according to the aims of the national policy.

Concerning EV use in Malaysia, the government later formulated the following goals (Greentech Malaysia, undated): until 2020, 100,000 passenger EVs, 2,000 bus EVs, and 100,000 electric scooters or motorcycles should be on national roads. In order to support the adoption of EVs, the government further aimed at installing 120,000 charging stations. Officially, BEVs are regarded as full EVs but HEVs and PHEVs as partial EVs (ibid). However, there is no information as to how partial EV types will be counted towards the 100,000 unit target. However, reaching this target will be difficult as less than 120 BEVs were registered by 2016. Further, it needs to be pointed out that the charging station target number includes the charging points of private PHEV and BEV owners as the government only wants to install 25,000 stations across the nation (The Sun Daily, 2016). 

Recently, news reports quoted Maximus Ongkili, Minister of Energy, Green Technology, and Water, that the goals, including a moderate increase to 125,000 charging stations, should be realised by 2030 (Clean Malaysia, 2017). As of December 2018, there were a total of 251 publicly accessible charging stations in Malaysia, suggesting that the minister’s revision was a de facto acknowledgement that the infrastructure goal cannot be realised until 2020. Whilst press statements are currently not reflected in policy documents, the 2030 timeframe appears more realistic.

Regarding EV policy measures, Malaysia exempted HEVs and PHEVs with internal combustion engines below a 2L engine capacity from import tax and granted a 50% lower excise duty from 2011 to 2013. Whilst this measure provided consumer incentives, subsequent policies served industrial aims. The National Automotive Policy (NAP) of 2014 supports EV production but, nevertheless, cannot be labelled as a dedicated EV policy. Rather, NAP aims to promote what it calls eco-efficient vehicles (EEVs). The government’s definition of EEV is broad, i.e. it includes fuel-efficient ICEVs, HEVs, PHEVs, and BEVs, as well as ones using alternative fuels (biodiesel, CNG, LPG, ethanol, and hydrogen (for both combustion engines and fuel cells)). Further, the initial policy declaration stated that EEVs would be specified via fuel efficiency and carbon emissions. 

Concerning the latter, a subsequent publication (MITI, 2014b) stated that emission criteria would only be applied after the Euro 4M11 fuel quality standard is introduced. After this step, a government study with stakeholder participation would investigate how this standard could be implemented. Subsequently, the level of carbon emissions would become a second parameter defining EEVs. In the meantime, EEVs are specified through fuel efficiency criteria. Regarding this indicator, the government has defined fuel efficiency parameters for different vehicle segments (Table 1).

Table 1: Eco-efficient Vehicle Specifications via Fuel Efficiency

The NAP provided several incentives for OEMs and parts producers to locate manufacturing activities related to EVs in Malaysia (MITI, 2014). First, Malaysia exempted domestically assembled HEVs and PHEVs from all duties and taxes until the end of 2015, and BEVs even until the end of 2017. Second, the country extended the use of existing policy tools, namely Pioneer Status (PS) and Investment Tax Allowance (ITA), to hybrid and electric vehicles.12 PS with full tax exemption is granted for 10 years and 100% ITA within 5 years. Moreover, grants are available for related customised training and R&D as well as exemption from excise duty for locally assembled or manufactured cars. 

Similar to the promotion of conventional vehicle components, the producers of components critical for electric and hybrid vehicles – electric motors, electric air conditioning, electric batteries, battery management systems, air compressors, and inverters, as defined by the Malaysian authorities – can choose between PS or ITA with the aforementioned benefits. The impact of EV policies must be described as limited at the time of writing. Regarding BEV adoption, there are fewer than 120 of these vehicles registered in Malaysia. Turning to production, some OEMs have taken advantage of the provided incentives and located CKD assembly in Malaysia: Honda started to assemble the Jazz Hybrid (HEV) in 2012, Nissan the Serena S Hybrid (HEV) in 2014, Toyota the Camry Hybrid (HEV), and Daimler commenced assembly of the Mercedes-Benz S400 L Hybrid (HEV) in 2014, and added the C350e (PHEV) and E350e (PHEV) in 2016 and 2017, respectively.

It is noteworthy that Malaysia’s two national carmakers, Proton and Perodua, did not display strong support for EV development and commercialisation. Whilst Proton announced that it would sell BEVs from 2014 and showcased a prototype EV version of its Iriz minicar in 2015, this plan was never realised (Hamid, 2016). Only after the recent partnership with Geely does Proton appear to be able to manufacture BEVs based on Geely’s electric powertrain technology. Perodua, whose vehicle line-up consists of mini and small cars, stated that it does not plan to produce EVs (Saieed, 2017). Regarding the negative stance towards EVs, Perodua stated that the Malaysian charging infrastructure was insufficient to support EVs and that the firm intends to focus on improving ICEV technology. As Perodua heavily relies on Daihatsu for vehicle technology, this stance cannot be surprising because Daihatsu is also only offering a few HEV models.

Overall, despite the mixed motives for EV support, measures aimed at consumers have been phased out and those for producers were sustained for a longer period. Therefore, it may be concluded that policy is mainly motivated by industrial policy with environmental undertones. Malaysia did not create a dedicated EV policy programme but supports all emission-reducing technologies. Subsuming EVs under general automotive sector policy in such a way appears to have the drawback whereby issues such as charging infrastructure have been addressed in planning but not in policy implementation. Malaysian policy towards EVs has only been mildly successful in attracting manufacturing activities but largely a failure in consumer adaption. As most manufacturing is only assembly, the effectiveness of policy appears limited. Moreover, the key question is whether EV assembly will remain in Malaysia after the incentives are removed.