New EV road tax will be 85% lower than current calculation

PUTRAJAYA: New road tax fees for electric vehicles (EVs) will come into force once the exemption on road tax fees on zero emission vehicles ends on Dec 31 next year.

The news rates will see a reduction of up to 85% in road tax fees for EVs come Jan 1, 2026 aimed at encouraging the use of EVs among Malaysians while also developing the nation into EV manufacturing hub in the region.

"This announcement is an important message to EV manufacturers to make Malaysia as an EV manufacturing hub and base because the government is fully committed in encouraging the adoption of EVs and we are doing all we can to support this," the Transport Minister Anthony Loke said at a press conference today.

He said the new fee structure is based on the power output of the vehicle's electric motor with a progressive increase in fees depending on its electrical output.

In February 2022, the Road Transport Department (JPJ) announced full road tax exemption for EV vehicles from Jan 1, 2022 to Dec 31, 2025.

Depending on vehicle model, EV owners would have had to pay between RM243 and RM17,494 annually in road tax if no exemption was given.

Under the new road tax structure, EV owners will pay between RM70 and RM6,715 annually.

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Loke said there was a reluctance among internal combustion engine car owners to switch to EVs owing to uncertainty as to the road tax fees for EVs beginning in 2026.

As such, he said that the ministry wanted to ensure that the new fee structure for EVs would be lower than the present one and decided to base it on power output of the vehicles.

The new fee structures is based on nine blocks ranging between 1kW and 1.01MW.

For example, Loke said Block 1 is for EVs that have power output from 1 watt to 100,000 watts and Block 2 is between 100,001 watts and 210,000 watts.

He said the minimum road tax fee for Block 1 is RM20 while the maximum rate is RM70.

Under Block 3, the minimum fee is RM305 with a maximum fee of RM575, he said.

"Consumers are only concerned about how much they have to pay and not how the calculations are done.

"That is why we chose the most simple and straightforward approach to ensure that the fees are lower than the current rate including if compared to the road tax for internal combustion vehicles," he said.

For example, Loke said, the owner of a vehicle with an output of between 100,001kW and 200,001kW will pay a fee of between RM20 under the new road tax structure compared with between RM80 and RM280 if no exemption was given under the existing rates.

He cited the example where an owner of a BYD Dolphin Premium Standard Range would have to pay RM624 in road tax while a Tesla Model Y owner would have to pay RM2,583 under the existing rates if there were no tax holiday.

"Under the new fee structure, the road tax for the BYD would only be RM120 while the fee for the Tesla would be RM305.

"This represents a reduction of about 85% in fees," he said, adding that the fee structure would be reviewed once every five years.

He said that the the government was aware the the reduction in road tax fee for EVs could impact JPJ's annual revenue of RM4bil in road tax fee collection.

However, he said the government decided to go ahead with the new fee structure as it would bring greater benefit to the nation while helping the transition to EVs.

Asked if there would be a review of road tax fee for internal combustion vehicles, Loke said there were no plans to do so at the moment.

In 2023, Loke said a total of 15,671 EVs were registered out of 1,533,332 vehicles registered in total nationwide.

As of April 30 this year, 7,003 EVs were registered out of 499,945 total vehicles, he added.

On a related matter, Loke said the ministry is in talks with car manufacturers to issue special plates for EVs and an announcement would be made once matters have been worked out.
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