KUALA LUMPUR: BMI, a Fitch Solutions research company, says demand for electric vehicles (EVs) will far outstrip that of internal combustion engine (ICE) cars within its 2023-2032 forecast period.
"We currently forecast total EV sales to quadruple in 2023, although the country’s EV penetration rate (EV sales as a percentage of total vehicle sales) will sit at just 1.8 per cent.
"Although the growth rate for the Malaysian EV market is significant, we note that it falls behind that of 2022 (+870.8 per cent),” it said.
Looking at the key drivers for Malaysia’s prospective growth in EV adoption rates, BMI highlighted the extension of import duty exemptions for components for the local assembly of EVs, the excise duty and sales tax exemptions for locally assembled completely knocked down (CKD) EVs, and the import and excise duty exemptions on imported completely built-up (CBU) units.
Another important consideration made in the EV forecast is the presence of local EV manufacturing from Volvo and Mercedes-Benz, it said.
"The latter has indicated that it plans to have 30 per cent of all its vehicles sold in Malaysia to be electrified by 2030, as Malaysia offers one of the highest EV penetration rates for its products globally.
"Indeed, Malaysia has also witnessed a large number of automakers entering the market giving consumers more choices,” it said.
BMI said BYD, the vertically-integrated Chinese EV automaker (largest EV maker in the world) has entered the Malaysian market offering affordable EV options such as the Dolphin model and the popular SUV Atto 3 model.
Moreover, commercial EVs are also picking up steam with the announced entrance of Volvo commercial heavy trucks, it said.
"With road freight a dominant mode of transporting goods in the country, electric heavy trucks will be in focus especially as companies look to scrutinise their supply chains for emissions reductions,” it said.
On the automotive industry as a whole, BMI said has revised upward its projection on total vehicle sales in Malaysia for 2023 to rise by 3.8 per cent, which is in contrast to its previous forecast of a 9.0 per cent decline.
The revision was made following the better-than-anticipated pent-up demand for vehicles bought during the sales tax exemption period, it said.
"We note that we had previously expected demand to taper off in the second quarter of 2023 (2Q 2023), however, data compiled by the Malaysian Automotive Association (MAA) shows that demand remained elevated throughout the first half of 2023 (1H 2023),” it said.
The sales tax exemption lapsed on June 30, 2022, and there was a grace exemption period that lasted up to March 31, 2023 for those cars which have been booked for purchase before the end of the sales tax exemption period.
A backlog in orders materialised following supply chain disruptions, which meant automakers could not fulfil orders, it said
According to the MAA, vehicle sales rose by 12.6 per cent year-on-year (y-o-y) in the first seven months of 2023 to reach 429,807 units versus 381,680 units over the same period in 2022. It forecast 2023 TIV at 725,000 units.
