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High Costs Remain a Hurdle to Wider Adoption of Electric Vehicles in Malaysia

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May 23, 2023

High Costs Remain a Hurdle to Wider Adoption of Electric Vehicles in Malaysia

Despite the efforts of the Malaysian government to promote the purchase of electric vehicles (EVs), the relatively high costs continue to pose a challenge to their wider adoption in the country.

Despite the efforts of the Malaysian government to promote the purchase of electric vehicles (EVs), the relatively high costs continue to pose a challenge to their wider adoption in the country. According to RHB Research, there are currently no EVs priced below RM100,000 on the road (OTR) with insurance in Malaysia due to the Ministry of International Trade and Industry’s approved permit policy, which restricts the importation of EVs with a lower price tag.

While EV adoption is growing, it has not yet reached a point where it can significantly boost the total industry volume (TIV), states the research house. Currently, the cheapest EV available in Malaysia is the Neta V EV, priced at RM99,800 OTR, without insurance. Another option is BYD’s Dolphin, which has an OTR price of RM100,500. RHB reports that while the Dolphin has gained some popularity, consumers may still opt for cheaper internal combustion engine vehicles.

However, RHB believes that the introduction of Tesla’s Model Y, with a starting price of RM199,000, and the upcoming launch of the Model 3, potentially priced at RM160,000, could drive up EV adoption in Malaysia. The research firm suggests that Tesla’s reputation in the EV and autonomous driving space, combined with these competitive prices, could potentially take market share away from other brands such as Hyundai’s Ionic 6 and Kia’s Niro EV, which are priced higher.

In addition to Tesla, Chinese brand Chery has also entered the Malaysian market with its Omada 5, directly competing with Proton’s X50 and Honda’s HR-V. Chery’s Tiggo 8 Pro serves as a cheaper alternative to the Mazda CX-8 and competes with Proton X90. Despite this competition, RHB believes that most consumers still prefer domestic and Japanese brands, which offer higher resale value.

RHB Research has a “neutral” rating on Malaysia’s auto sector as it expects car sales to soften year-on-year in 2024. They note that Bermaz Auto is their top pick, due to the expected volume growth in their various marques, especially from a low base, and the attractive dividend yield of 9% it offers.