International Business Review


Electrifying Mobility
Championing Electric Vehicles in Malaysia

by IBR Malaysia
10 February 2016

The town of Gurun in Kedah is undergoing great changes. Long known for its agriculture industry, this enclave of approximately 16,000 people will be home to Malaysia’s first electric vehicle (EV) assembly plant by July 2016. This project, which is a joint-venture between China’s Beijing Auto International Cooperation (BAIC) and Malaysia’s Amber Dual, aims to start the ball rolling for Malaysia to become a regional EV hub. 

Under the National Automotive Plan (NAP) 2014, Malaysia aspires to be a centre for the production of energy efficient vehicles (EEV). Aside from electric vehicles, these include fuel-efficient vehicles, hybrids, and automobiles running on alternative-fuels such as biodiesel, hydrogen, fuel-cells and liquefied petroleum gas (LPG). 

In order to strengthen the position of local players the government lifted duty exemptions that imported EVs and hybrids had enjoyed since 2012, such as waiving the 30% import tax and offering a 50% discount off the 80% - 105% excise duty imposed on other imported vehicles. 

According to the Minister of International Trade and Industry Datuk Mustapa Mohamed, the exemptions were granted in order to encourage electric car manufacturers to set up production plants in Malaysia. This in turn would have helped boost the take-up of electric vehicles in the country. 

Since there had been no significant progress in either of these aims, the government decided to remove the discount and exemptions, and give incentives only to companies that manufacture EVs and hybrids locally. 

Proton is also entering the fray. In October 2014, it announced that its prototype Iriz EV had set a record of travelling 240 km on one charge. This means that it outperformed the Nissan Leaf’s 195 km. 

Commercial production of the Iriz EV is expected to start in late 2016 or early 2017. BAIC will start production of electric cars in its Gurun facility by the middle of 2016. Also, electric cars such as the Nissan Leaf and Mitsubishi MIEV are already available for sale in Malaysia.  

Creating the Infrastructure 

More needs to be done if the country hopes to have 2,000 electric buses, 100,000 electric scooters/motorcycles and 100,000 electric cars on the road by the year 2020, as targeted in the Economic Transformation Programme (ETP). 

As of March 2015, there were just 90 registered EVs in Malaysia. There are a number of factors which have contributed to this poor uptake, with the lack of charging stations ranking highly among them. There are only 41 charging stations in the country, with most of them located in urban areas such as the Klang Valley, Penang, and Johor.

Since EVs have limited mileage, the lack of chargers outside urban areas limit inter-state travel.  This is why the Malaysian Green Technology Corporation (GreenTech Malaysia) is aiming to deploy 300 more charging stations around Malaysia in 2016, with a long-term target of 125,000 stations by 2020.

The 300 stations will be located in high traffic areas such as shopping malls and commercial centres in the Klang Valley, Penang, Langkawi, Johor and Melaka, as well as along the North-South Highway which runs the length of Peninsular Malaysia. 

Addressing Challenges

This is in line with the National Electric Mobility Blueprint, which aims to position the country as an electric mobility marketplace. GreenTech Malaysia, a corporatised entity under the Ministry of Energy, Green Technology and Water, has been entrusted with the execution of the blueprint, which includes setting up an EV ecosystem as one of its four pillars, along with rolling out EV for both public and private transport, and establishing EV as an economic contributor. 

Price is another obstacle to the take-up of EVs in Malaysia. Although maintenance and fuel costs are lower by 64% and 69% compared with conventional petrol-powered cars, the entry point is higher. A Nissan Leaf costs more than RM180,000, while the Nissan Latio is priced at under RM100,000. So even though an electric car owner may save more than RM49,000 over 10 years, the initial cost deters many buyers. 

Local production of EVs is the answer to this problem, as such vehicles are exempt from excise duties. The estimated price for the BAIC EV and the Proton Iriz EV is less than RM100,000. Although this is higher than many other locally produced cars, it is significantly cheaper than imported EVs, and lowers the barrier of entry for middle-class Malaysians. 

Reasons to Choose

So, why should Malaysians embrace EVs? Simply put, it is good for the environment and the economy. It is estimated that over 10 years, a conventional car releases 32,248kg of CO2  into the atmosphere, and that 6.4 million tonnes of carbon emissions can be eliminated by 2030 if Malaysia meets its EV targets.

By reducing air pollution, cases of respiratory ailments and other problems associated with poor air quality can be lowered. This in turn will help lower cases of absenteeism due to ill-health and increase productivity. In addition, the savings that consumers make from having to spend less on fuel and maintenance can be reinvested in other areas, thus stimulating other areas of the economy. 

Furthermore, approximately RM328m of investment is needed to enhance the EV and EV component manufacturing sector in Malaysia. This in turn will result in a contribution of RM4.965b to the gross national income and create 14,568 jobs by 2020. 

EVs can also help reduce the strain on the national power network. As explained by GreenTech Malaysia CEO Ahmad Hadri Haris, EV batteries can also act as energy storage systems. EV owners can use them to supplement electricity from the grid during peak hours, therefore cutting costs. The battery can then be recharged during off-peak hours when electricity tariffs are lower. 

Clean energy website Cleantechnica also reported that in 2014, the global EV market grew by 69%. In addition, sales worldwide are expected to reach 6 million by the year 2020. For Malaysia not to tap into this market when it hopes to be regarded as an automotive hub would be short-sighted, especially since neighbouring Thailand is reportedly setting its eye on rolling-out its first locally produced electric car within five years.

The race is on to become the EV production hub of Southeast Asia. Although Thailand has a stronger reputation for automotive manufacturing, Malaysia has the advantage of a head start and a comprehensive action plan to create an ecosystem and infrastructure. But as with everything, effective execution will be the key to success.

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