Glove craze out, electric vehicle craze in

PETALING JAYA: Two years ago, Malaysia saw a flurry of companies rushing into glove manufacturing as they tried to get a slice of the pandemic-driven demand.

But the craze quickly died out and this year, an increasing number of listed companies are instead jumping on the electric vehicle (EV) bandwagon.

Companies are looking to cash in on the projected future demand for EVs, as they are expected to replace the traditional internal combustion engine (ICE) vehicles on the road.

In addition, the venture into EV also makes companies’ environmental, social and governance (ESG) profile more appealing.

However, one wonders whether the transition away from ICE vehicles could take place fast enough to provide a bankable market for the new EV players.

Another big question is, are some companies announcing their EV ventures just to create positive news flow?

After all, some of the listed players who have announced their EV-related deals are companies that are financially weak.

The new-found craze for EV is not surprising, especially with global EV sales growing exponentially.

According to the International Energy Agency, global sales of electric cars – including fully electric and plug-in hybrids – had doubled in 2021 to a new record of 6.6 million units, which is almost 9% of global car sales.

China alone accounted for about half of the total global sales.

However, in Malaysia, the EV market is still in its infancy, despite the fact that there are some listed companies indirectly involved in the EV sector via manufacturing of components, machineries’ fabrication processes and solutions for global EV makers.

Undeniably, costs and infrastructure are major roadblocks to the adoption of EV in Malaysia.

The good news is that the country is seeing active efforts in building an expansive EV infrastructure nationwide, beginning with key cities.

For example, Petroliam Nasional Bhd (PETRONAS), via its clean energy company Gentari Sdn Bhd, has been setting up its EV charging stations in several locations.

In line with the growing demand for EVs, a number of listed companies in Malaysia are embarking on EV-related businesses.

Automotive parts manufacturer EP Manufacturing Bhd (EPMB) had, in October 2022, announced its venture into electric car manufacturing, about a month after the group received the government’s approval to license its first-ever electric two-wheeler.

EPMB signed a memorandum of agreement with California-based Saean Group, aiming to mass-produce 20,000 units of five-door, four-seater A-segment cars annually for the South-East Asian market.

Under the partnership, Saean will offer technical and design know-how, while EPMB will provide support through resources and market information for the project, as well as to “actively strive for mass production, supply and sales.”

Electric bikes

With regard to two-wheeled EVs, EPMB is working towards manufacturing and distributing Blueshark-branded electric bikes for the Malaysian and other South-East Asian markets.

Ni Hsin Group Bhd, a manufacturer of premium cookware, has also diversified into the business of EV bikes.

In November 2022, Ni Hsin Group launched its TAILG EBIXON EV bikes and aims to sell 15,000 units a year.

Via its subsidiary Ni Hsin EV Tech Sdn Bhd (NH EV Tech), the group will be assembling the electricity-powered motorcycles at its manufacturing facilities in Seri Kembangan, Selangor.

“There are lots of opportunities for the use of EVs, with the government providing incentives in the form of tax reliefs for the assembly or manufacturing of EVs, component parts and the development of EV ecosystems such as charging facilities.

“Also, the global electric scooter and motorcycle market is estimated to grow at a compounded annual growth rate of 10.2% to US$93.9bil (RM415.37bil) by 2031 from US$35.3bil (RM156.15bil) in 2021,” NH EV Tech managing director Khoo Chee Kong said earlier.

It is noteworthy that both Ni Hsin and EPMB are loss-making companies. In the third quarter ended Sept 30, Ni Hsin recorded a net loss of RM2.57mil while EPMB posted a net loss of RM1.9mil.

Interestingly, both companies have spoken about their carbon-credit trading ambitions as they announced their respective EV ventures.

The companies are eyeing for a “green” revenue stream whereby their EV businesses could generate carbon credits or offsets that can be sold to other companies – typically carbon-intensive industry players – to reduce their carbon footprint.

Carbon credits

The carbon credits can be traded via a carbon market such as Bursa Carbon Exchange, which was launched on Dec 9.

Among other listed companies that are embarking on EV-related deals are Computer Forms (M) Bhd, CSH Alliance Bhd and Solarvest Holdings Bhd.

Loss-making Computer Forms, which prints and distributes computer forms and stock forms, announced in September 2022 that it will be joining hands with Thailand’s Energy Absolute Pcl to “maximise opportunities” in the production and distribution of EV-buses, EV-cars, EV-trains, EV-bikes and EV-boats.

Group managing director Datuk Justin Lim Hwa Tat said the joint venture will invest an estimated RM5bil in stages into the collaboration and other ventures.

This includes developing energy storage and charging platforms as well as producing lithium-ion batteries to support the EV ecosystem in Malaysia.

Porcelain and ceramic products maker CSH Alliance Bhd also announced its shift to the EV sector this year on the heels of its decision to scrap its plan to construct a glove manufacturing plant.

The company, which is also loss-making, was appointed by BYD Malaysia Sdn Bhd in April 2022 as the distributor of the latter’s commercial electric vans.

In May, CSH Alliance announced that its EV unit is buying three plots of industrial land measuring 55.32 acres in Tanjung Malim, Perak, for RM12mil to build an EV assembly plant.

It is worth noting that Sime Darby Motors, the automotive arm of Sime Darby Bhd, has been appointed as the official exclusive distributor of BYD passenger EVs this month.

A total of RM500mil will be invested over two years to establish a wide network of BYD showrooms and also the charging facility.

Meanwhile, clean energy specialist Solarvest announced this month that it is venturing into the EV charging-port market, with the launch of EV charging and mobility solutions called PowerBee.

Target markets

The company said it will be focusing on three target market segments – the residential segment with seven to 22 kilowatt (kW) alternate current charger; commercial and industrial with slow charging of 11 to 22kW or fast charging of 30 to 60kW; and highways with 60 to 180kW.

Speaking with StarBizWeek, an analyst says EV ventures may not be necessarily lucrative but points out that they present huge growth potential moving forward.

“Malaysia is still in the nascent stage of EV adoption, so we are unsure how the margins would look like.

“The early entrants into the sector will enjoy the first-mover advantage, although this will erode as more companies jump on the bandwagon.

“For those companies venturing into building EV infrastructure such as charging stations, I believe they will see a greater demand in the medium term as more EVs come onto the road,” the analyst says.

Looking ahead into 2023, it is expected that more listed companies – including non-automotive players – would enter the EV business.

The revised Budget 2023, which will be tabled next year, could provide better incentives for companies to explore EV-related projects.

Once the government starts to actively deal with EV-related costs and infrastructure issues, the adoption of EV is likely to accelerate in Malaysia.