2-8-2024 (KUALA LUMPUR) Malaysia has taken a bold step into the electric vehicle (EV) arena with the launch of one of its first domestically produced electric cars. However, industry analysts predict that the fledgling Malaysian EV industry will face formidable competition from an influx of Chinese manufacturers, who are increasingly turning their attention to Southeast Asia’s burgeoning $100 billion market.
The shift in focus by Chinese EV makers comes in the wake of prohibitive tariffs imposed by the United States and the European Union. In May, the US slapped a 100 per cent tariff on Chinese-made EVs, while the EU followed suit with tariffs of up to 38 per cent on three major Chinese brands – BYD, Geely, and SAIC – citing “unfair subsidisation” by Beijing.
On Friday, Proton, Malaysia’s national carmaker, unveiled the e.MAS7, touted as one of the country’s first locally badged EVs. This launch is part of the Malaysian government’s strategy to ensure domestic firms can compete with the anticipated flood of foreign electric vehicles in the market.
Maybank Investment Bank analysts suggest that the redirection of Chinese focus is likely to drive higher EV sales across the Association of Southeast Asian Nations (ASEAN), particularly in countries like Malaysia and Indonesia. These nations offer favourable regulations and have established partnerships between local and Chinese carmakers.
“We prefer ASEAN companies that partner Chinese car makers for manufacturing and sales, and companies in the battery value chain,” Maybank IB stated in a recent note.
The e.MAS7 has been the subject of speculation, with rumours suggesting it might be a rebadged version of an SUV model built by Geely, which holds a 49.9 per cent stake in Proton. However, Proton executives have denied these claims, insisting that the e.MAS7 was designed specifically for the Malaysian market.
Meanwhile, Perodua, Malaysia’s largest domestic carmaker by sales volume, is also developing its own EV. The company’s chief executive, Zainal Abidin Ahmad, announced in May that their EV project was 60 per cent complete and is expected to hit the market in 2025 with a price tag under 100,000 ringgit (US$21,000).
The Malaysian EV market has shown significant growth, with sales surging by nearly 290 per cent to 10,159 units in 2023, up from 2,631 units the previous year.
However, the aggressive push by Chinese EV makers into Southeast Asia has not been without controversy. In Thailand, the region’s largest EV market, complaints have arisen over steep discounts offered to spur sales, which have upset early adopters who paid higher prices. Thai authorities have launched an investigation into these practices following accusations of misleading sales tactics.
Malaysia may be somewhat insulated from similar issues due to existing regulations. Shahrol Azral Ibrahim Halmi, president of the Malaysian EV Owners Club, explained that car pricing in Malaysia typically requires approval from the automotive business development committee led by the ministry of trade and investment.
“This is one way the government can help moderate wild price swings. This will also help manage risks to financial institutions given their exposure,” Shahrol told This Week in Asia.
