Carmakers to boost EV plans
31 Jan 2025
AS the deadline for the end of incentives for fully-imported electric vehicles (EV) edges closer, carmakers are expected to accelerate plans to localise their EV supply chain and initiate local assembly to reduce costs and maintain price competitiveness.
Four key hotspots in Peninsular Malaysia have been identifed as actively attracting EV-related investments especially from Chinese players – Perlis, Perak, Pahang and Johor.
Beyond the local original equipment manufacturers such as Perodua and Proton, Malaysia has experienced a significant influx of new players in the automotive industry in recent years, with the majority coming from China.
Many of these newcomers have announced plans to establish EV assembly operations here including for export markets. However, EV assembly in the country remains in its infancy, with most operations currently limited to SKD or semi-knocked down assembly.
CLOCK IS TICKING
The government currently offers 100 per cent import duty and excise duty exemptions for fully imported or complete built-up unit (CBU) EVs, covering both battery EVs and plug-in hybrid EVs (PHEVs).
These exemptions apply to passenger vehicles including cars, vans and motorcycles, intending to make EVs more affordable and accessible to consumers.
The exemptions for passenger EVs are valid until Dec 31 this year.
Restrictions on importing CBU EVs priced less than RM100,000 are also set to expire at the end of 2025, potentially creating a freer market for EVs, provided carmakers can compete on costs.
These CBU incentives aim to boost EV adoption and serve as a transitional measure while the local EV market matures.
An industry observer said the government plans to shift its focus to incentivising local assembly or complete knocked down (CKD) operations of EVs, emphasising domestic manufacturing and development of EV supply chains.
This will increased localisation within the EV supply chain.
“The automotive industry is transitioning, driven by the rise of EV players, with current investments focusing on downstream areas like showrooms and service centres, as well as growing interest in EV assembly,” the observer said.
Automotive analyst Shamsul Yunos said while the country is far from the final chapter of the EV transition, the opening scenes seem to favour those who have built and etensive supply chain of batteries.
They are now pivoting that massive production capability, not just towards the transition to EVs but the overall shift towards renewable energy, he added.
KEY HOTSPOTS
Maybank Investment Bank Bhd automotive analyst Loh Yan Jin said there were several companies from China exploring EV investments in Perlis, particularly in the Chuping area near Padang Besar.
The Chuping Valley Industrial Area has been positioned as a hub for green industry, halal industry including pharmaceuticals, EV and renewable energyy.
“The EV industry, in particular, could benefit from the state’s proximity to Penang and Kedah, where the semiconductor industry is concentrated, as this provides an advantage in terms of logistics for the EV supply chain,” Loh said.
Perak, meanwhile, is positioning itself as a key player in the high-tech industrial sector, focusing on developing industrial park like the AHTV to attract EV assembly plants and battery recycling facilities.
The state is also leveraging its rich natural resources, particularly non-rare earth elements (NR-REE), by prioritising the export of value-added products such as magnets and components for EVs, rather than raw materials.
“One example of this is Perak’s exploration of a potential collaboration with Star Group Industries, a leading South Korean company with expertise in producing downstream products from REE.”
Additionally, Loh said, EcoNiLi Battery New Energy had launched a battery recycling plant in Perak in 2024, marking the first phase of its investment at RM50 million, with plans to invest another RM100 million in the second phase this year.
For Pahang, it is rapidly emerging as a key hotspot for EV investments, largely driven by the Malaysia-China Kuantan Industrial Park (MCKIP).
The park has become a magnet for Chinese EV manufacturers, bolstered by its strategic location near Kuantan Port, which facilitates seamless import and export operations.
To further attract investments, the state government offers attractive tax incentives for green technology, reinforcing its commitment to supporting the EV sector.
Currently, several key battery materials suppliers are already operational in MCKIP.
They include Camel Power (a supplier of batteries for ICE vehicles) and Elektrisola Group (which manufactures high-quality, fine, and ultra-fine enamelled copper wires used in automotive and industrial electronics).
Graphjet Technology, a producer of graphene and graphite which are critical materials for EV batteries and semiconductors, also plans to expand its presence in Kuantan.
In addition to these developments, Pahang is home to significant infrastructure such as the Pahang Automotive Park and the Hicom Automotive Manufacturers Plant, where several prominent automotive brands are assembled.
Notably, Mercedes-Benz began producing its all-electric EQS model at this plant in the first quarter of 2023, marking the first fully electric Mercedes EQ to be assembled in Malaysia.
Loh said the completion of the East Coast Rail Link (ECRL) by 2027 is expected to further enhance Pahang’s logistics network, solidifying the state’s attractiveness for investments.
“Perodua, for instance, plans to establish a logistics and vehicle assembly hub on 8.9 hectares in the East Coast Economic Region, utilising the ECRL’s Paya Besar Station for vehicle distribution within the region.”
The hub will also leverage Kuantan Port for shipping vehicles to Sabah and Sarawak, Loh added.
Ongoing discussions between East Coast Economic Region Development Council and Perodua are expected to culminate in finalised plans by 2025.
As for Johor, Chinese companies are in negotiations to establish a large scale EV manufacturing facility in Johor, aimed at producing 10,000 EVs monthly for export to the African market.
The project is evaluating three potential locations: Tanjung Langsat in Pasir Gudang, Tanjung Piai in Pontian, and Pengerang in Kota Tinggi.
Once operational, the plant is expected to generate over 10,000 jobs for the local workforce.
Source: NST
