Even without a plant, Tesla’s impact will be felt

12 Aug 2024

Tesla Inc is not setting up a manufacturing and assembly plant in Southeast Asia. Nevertheless, its presence in Malaysia will long be felt because it knocked down barriers in the automotive industry.

It is the first marque that was allowed into the country without the need for approved permits, or APs. The exemption Tesla obtained from the Ministry of Investment, Trade and Industry effectively broke bumiputra car traders’ monopoly of importing cars.

Secondly, there were long queues when Tesla opened its sales office here. Never before had there been such hype surrounding any of the domestic automotive companies.

And finally, Tesla’s move to cut prices to maintain its leading position in the electric vehicle (EV) segment has sparked a price war and made EVs more affordable.

Tesla has its own set of problems, which is why it is not investing in a regional plant. It has invested substantially in the building of a gigafactory in China. However, it is facing stiff competition from the other marques, especially BYD Auto Co Ltd, in the country.

To keep up market share, Tesla has been cutting prices and sparked a price war in China. That price war has spilled over into Malaysia. BYD is selling its cheapest models here for slightly more than RM100,000.

Given the intense EV landscape, it is easy to fathom why Tesla has decided to scrap production plans in the region. Nevertheless, even without establishing a plant, its impact will always be felt in the domestic market. Consumers now know for sure that the price war in the EV segment is here to stay — for a while, at least — until such time when the likes of Tesla and BYD can come to a resolution.

Source: The Edge Malaysia