PETALING JAYA: Electric car enthusiast Farhan Abdul Rahim is thrilled about the tax exemptions for the sector recently announced in Budget 2022.
Farhan, who has had a Tesla Model 3 for over a year, thinks that the full exemptions from import and excise duties and sales tax for electric vehicles (EVs) will make the price of these cars more affordable to Malaysians.
“The exemptions are likely to mean a price tag of about RM60,000 to RM70,000 less for some models.
“For instance, the base model for Tesla 3 is priced at around RM330,000 to RM340,000. With these exemptions, you can get one for around RM280,000,” says the chemical engineer who had another EV, the Renault Zoe, previously.
“Many of my friends who used to be on the fence before went forward to make a booking for an EV the moment the Budget was announced,” he adds.
Farhan is a member of the Malaysian Electric Vehicle Owners Club, whose Facebook group has grown to 7,500 members. When it first started in 2019, it only had seven paid up members, including its founders; last year, there were 217.
Rise of the (electric) machines
Malaysia is not the only country in which there has been a rise in EV bookings as well as people showing an interest in buying one.
As climate change grips the world and the search for ways to reduce carbon emissions without impeding economic activities becomes even more urgent, the sale of EVs – and with it, the dream of using cleaner and more environmentally-friendly energy – has been increasing.
From escooters for that last mile connectivity from public transport stops to electric buses plying city routes, EVs are taking the transport sector by storm.Earlier this month, Tesla reported that it had delivered 936,000 of its electric cars in 2021, an 86% increase from the previous year despite the ongoing shortage of computer chips due to supply chain issues.
In Britain, electric cars accounted for 26% of sales in December last year alone when just a year before, in 2020, it only made up 6.6% of new cars bought.
Among sectors with the highest greenhouse gas emissions in Malaysia in 2016, mobility was second only to electricity consumption, so targeting this sector to reduce our carbon footprint is a no brainer.
However, Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad says EVs are generally beyond the reach of most people in the country at the moment, especially those in the low-income bracket.
“Thus, they are not meant for the mass market segment, at least not at present. The market for EVs is still very small, that is, not even 0.1% of annual total industry volume,” she points out, adding that consumer interest and demand remain low due primarily to price.
Aishah explains that over the past few years, the market for EVs in Malaysia has been driven mostly by the efforts and initiatives of some OEMs (original equipment manufacturers) such as BMW, Porsche, Nissan and Renault.
“These are the popular brands of EVs in the country at the moment,” she says.
But with the latest incentives announced by the government, Aishah notes that a number of other OEMs, particularly from China, Europe and South Korea, are showing more interest in introducing their EVs into the Malaysian market, citing the latest launch by Hyundai-Sime Darby Motors.
However, she cautions that even with the tax exemption incentives the cheapest electric car would still be beyond the reach of most ordinary rakyat.
“For example, the cheapest EV, such as the Nissan Leaf which costs more than RM150,000, is way more expensive than our national cars,” she says.
Nonetheless, MAA appreciates the government’s recent incentives for EVs, she says, calling them “a move in the right direction” and a way for the automotive industry to support the government’s efforts to reduce carbon emissions from motor vehicles.
Last year, Malaysia ambitiously pledged to unconditionally reduce its greenhouse gas emissions intensity across its economy by 45% against gross domestic product by 2030 compared with 2005 levels. We have also promised to achieve net zero emissions as early as 2050.
Policy support, reminds Aishah, has so far played a key role in most successful EV markets – without it, it is not easy for such markets to grow.
Power to the people
It will take more than just making EVs cheaper to get Malaysians excited about driving these cars.
For one thing, charging stations are still few and far between, even in the Klang Valley.
When he started driving his first EV, the first generation of Renault Zoe, which could then travel between 120km to 150km on a single charge, Farhan remembers a fear then was the lack of charging points.
“It took me some time to get used to knowing how far I could drive,” he recalls.
Not to mention that while there may soon be charging stations sprouting up in shopping malls and hotels in the Klang Valley and other major cities, that may not be the case in, say, a kampung in the depths of Sabah, which makes travelling to rural areas difficult.
“Look at how Tesla has become so successful. It may be one of the few manufacturers that not only makes EVs but sells the infrastructure as well,” says Farhan.
And selling almost a million units has really helped to accelerate the development of the EV infrastructure, he points out.
But we can’t rush into putting up charging stations willy-nilly. Aishah says implementing the EV industry must be carried out in stages to ensure its sustainability in the long run.
“More infrastructure development, particularly charging stations, ought to be built throughout the country and not only in major cities like Kuala Lumpur,” she says.
There should also be more direct incentives, such as incentives for companies that switch their corporate fleet to EVs and tax relief for individual owners, as well as incentivising the industry to bring in models directly (CBUs, ie, completely built up, or made in foreign countries and imported as fully operating vehicles, not parts assembled here), followed in stages by vehicles assembled in the country.
Another player in this sector, the Malay Vehicle Importers and Traders Association of Malaysia, signed a memorandum of agreement in August last year with the Malaysia Automotive Robotics and IoT (Internet of Things) Institute to collaborate on setting up a network of 1,000 DC rapid charging stations around the country by 2025.
Likewise, the Malaysian Green Technology and Climate Change Corporation has announced it is aiming to increase the number of its charging stations in Peninsular Malaysia from roughly 400 to over 2,500 units.
The agency under the Water and Environment Ministry is leading the country’s charge in green growth, climate change mitigation, and climate resilience and adaptation.
“We understand that land transportation consistently remained the second largest greenhouse gas-emitting sector in the country. As such, it’s important for the automotive industry to support the government’s efforts to reduce carbon emissions from motor vehicles,” says Aishah.
“After all, this is ultimately for the benefit of each and every one of us in terms of a cleaner and safer environment.”
There are also moves from the government beyond tax benefits. In a statement issued last Saturday, Science, Technology and Innovation Minister Datuk Seri Dr Adham Baba said a national platform to develop and commercialise energy storage systems for electric mobility as well as domestic and industrial consumption is being worked on.
The NanoMalaysia Energy Storage Technology Initiative (Nesti) programme, which was launched on Nov 23, will see participation from industry players, researchers and end users.
Adham said the ministry will continue to search for solutions based on science, technology and innovation in its efforts to achieve the country’s target of becoming carbon neutral by 2050.
“Among these is the technology to create energy storage for EV use, which will have positive spin-offs.
“The ministry has identified a storage system for renewable energy which is environmentally friendly as well as capable of reducing the use of fossil fuels,” he said.
Adham said that this year, the Enabling Mobility Electrification for Green Technology (Emerge) Programme, which is being spearheaded by Nano-Malaysia, will focus on developing and commercialising local EV technology with start-ups and small and medium-sized companies.
Electric dreams
However, people switching en masse to EVs won’t totally reduce Malaysia’s carbon footprint overnight.
This is primarily because much of our electricity – including the power at EV charging stations – comes from “dirty” sources, such as the burning of fossil fuels like natural gas and coal.
According to the Department of Statistics Malaysia, out of the 156,665GWh of electricity generated in 2016, coal was the main energy source at 46%, followed by natural gas at 39.7%, hydropower at 13.2% and oil at 0.7%.
Renewables made up a miserly 0.4%.
“Even with the introduction of EVs, one of the primary questions that has surfaced is, where does the primary source of energy come from?” says Renard Siew, climate change advisor at the Centre for Governance and Political Studies, a political science and social behavioural research firm.
“If the electricity comes from coal or other dirty sources, then technically, it wouldn’t really make much difference in terms of reducing the impact of carbon,” he points out.
We’re a country that is heavily reliant on fossil fuels – we are a net exporter of them – so to truly make a difference in mitigating climate change, Malaysia needs to commit to making the transition to renewable energy by increasing its portfolio in the sector, says Siew.
“The fact that we are situated near the Equator means that there is a lot of potential for harnessing solar power but this isn’t happening fast enough,” he says.
There have been various efforts to increase the mix of renewables in the country’s energy portfolio which “is encouraging to see”, Siew adds.
Despite the currently low adoption rate, he thinks that the transition to EVs is “just a matter of when”; however, he thinks there needs to be a campaign to raise awareness about the benefits of EVs before Malaysians will consider purchasing one.
Like Aishah, though, he thinks the government’s incentives for EVs are commendable and definitely a “good start”.
But without a definite shift away from relying on fossil fuels towards renewables for power generation, there is a danger that the promotion of EVs – and subsequently, Malaysia’s ambitions to lower our carbon emissions – may remain just that: A good start.
