The BMW iX (left) and i4.

PETALING JAYA: While the automotive industry has welcomed the proposed tax incentives for EVs (electric vehicles) under Budget 2022, the sector’s stakeholders and analysts do not expect EV sales to kick off in a big way just yet.

This is because there are issues such as EV production costs, the development of electric charging infrastructure and upskilling of after-sales support know-how to be addressed.

To support the development of a domestic EV industry, the government has proposed to provide various tax incentives for EVs.They include individual tax relief of up to RM2,500 for the purchase, installation, rental and subscription fees for EV charging facilities for two years from 2022 to 2023).

EVs will also get road tax exemption of up to 100%.

Imported or completely-built-up EVs will get full import and excise duty exemptions for two years.

Locally assembled or completely-knocked-down EVs will get full import and excise duty as well as sales tax exemptions for four years (2022 till end-2025).

On Friday, Hyundai-Sime Darby Motors (HSDM) confirmed the launch of the all-electric Kona this month, with estimated prices to start under RM150,000 (inclusive of the EV tax incentives) for the basic model.

The Kona EV will be offered in two versions, namely a longer range unit with a maximum driving range of 484km and another basic model with 305km.

“With the newly announced import and excise duty exemptions, we envisage greater interest in EVs in Malaysia,” says HSDM managing director Low Yuan Lung.

A Bermaz Auto Bhd (BAuto) spokesperson tells StarBizWeek that the company is evaluating the possibilities of bringing in EVs consisting of B-segment SUVs as well as passenger cars.

Bermaz Auto Bhd (BAuto) controls the local distributorship of three auto brands, namely Mazda, Kia and Peugeot.

“We are engaging with the principals to encourage them to be more involved in our EV programme, in line with the government’s aspiration to go carbon neutral in the mobility sector,” says the spokesperson.

However, the spokesperson points out that there are issues to be addressed including EV infrastructure development in the country and the upskilling of skill sets to handle high voltage battery and electrical components.

Another issue is the cost of EVs, despite government tax incentives.

“The basic cost of a small EV is still in the region of RM150,000. Hopefully, within a short period of time, with the advance of technology and competitive manufacturing processes, the cost of the EV battery and power output will improve.

“This will reduce the cost of EVs and make them more affordable,” says the BAuto spokesperson.

In July, Maybank Investment Bank Research had said BAuto may introduce a new line-up of EVs if Malaysia’s upcoming EV policy is attractive.

“It plans to bring in Kia’s flagship EV6, Niro and Sportage; and the Mazda MX-30, subject to its principal’s approval,” said the research unit.

BAuto executive chairman Datuk Seri Ben Yeoh Choon San does not expect the tax incentives to spur EV sales in the short term, as they would have a more direct impact on luxury car makers that have a ready line-up of EVs.

“A lot of critics would say this EV programme will be for the rich,” Yeoh was quoted by a local business portal after BAuto’s launch of the new Peugeot 3008 and 5008.



Proton Edar CEO Roslan Abdullah also recently tells StarBizWeek that the EV sector still has “a long way to go, as the building of a charging infrastructure to help support larger numbers of EVs is a considerable obstacle that needs to be overcome.”

Roslan welcomes the tax incentives for EVs, saying they will help raise the adoption of EVs and the proliferation of offerings.

“Proton has a planned roadmap towards introducing hybrid, plug-in hybrid vehicles and EVs – so perhaps this development can help to push our plans forward,” he says.

Mercedes-Benz Malaysia vice-president of sales and marketing Michael Jopp says in 2022, the company will be ramping up its local EV strategy with the introduction of its EQ range and “have plans to ensure both sales and aftersales readiness.”

“This is in line with Mercedes-Benz’s global direction of going all-electric by the end of the decade where market conditions allow,” he tells StarBizWeek.

On the potential local assembly of EVs, Jopp says: “Planning for locally assembled models take some time and we are currently reviewing our local EV strategy, which also includes the review of local assembly as there are many readiness factors to consider. We are awaiting further details and wait to see developments beyond 2023.”

Jopp also opines that Mercedes-Benz Malaysia hopes to see further investments and legislation that promotes the installation of charging infrastructure, particularly with new and existing property developers.

“Mercedes-Benz is committed to invest and enhance the EV infrastructure in Malaysia and we are open to collaborations with relevant partners. We are also committed to our EV readiness by ensuring our dealer partners, training and workforce are ready,” he adds.

UMW Toyota Motor president Ravindran K believes the tax incentives will enable such zero emissions vehicles to be priced more attractively and also, see increase in their usage.

“We are happy to note that the government will provide meaningful support to the industry to start developing the EV sector. The tax incentives will also help to encourage more Malaysians to switch to EVs. As more EVs are put on the roads, air pollution can be reduced and at the same time, dependence on fossil fuels will also diminish,” he says.

Ravindran points out that UMW Toyota Motor has already started the first phase of its electrification programme with the local assembly of hybrid electric vehicles.

“The company and its principal, Toyota Motor Corp, share the same objective of reducing carbon emissions in the longer term and our approach is one which we believe to be the best approach at this time so that no customer is left behind,” he says.

Meanwhile, Sime Darby Bhd group CEO Datuk Jeffri Salim Davidson says the tax incentives will certainly spur EV sales volumes.

“In line with our sustainability blueprint, we target to have a more energy-efficient product portfolio by 2025,” he says.

Sime Darby says it’s regional EV ambitions are complemented by partnerships with new EV brands such as Nio, Weltmeister and Li Auto.

Sime Darby also says its auto businesses in China, the world’s largest EV market, provides the group with insights which can be adapted to support the development of a robust EV ecosystem in Malaysia.

Sime Darby’s wholly-owned subsidiary, Sime Darby Holdings Bhd recently inked a non-binding memorandum of understanding (MoU) with Ecoride Sdn Bhd with the support of the Malaysian Green Technology and Climate Change Corporation (MGTC), an agency of Environment and Water Ministry.

The MoU seeks to explore opportunities for collaboration to supply EV fleets and provide after-sales services.

BMW Group Malaysia managing director Hans de Visser had said the EV tax incentives would not only increase uptake of EVs but also encourage further development of the EV infrastructure and ecosystem to drive smarter, low-carbon communities and cities in the country.

“We have always believed that the future is electric and we have been at the forefront of electrified mobility in Malaysia since 2015, when we introduced BMW i,” says de Visser

Keywords