KUALA LUMPUR: BMI, a Fitch Solutions company, forecasts Malaysia’s electric vehicle (EV) sales to quadruple in 2023, although the country’s EV penetration rate would be at just 1.8 per cent.

In a note, BMI said Volvo and Mercedes-Benz’s local EV manufacturing set-up would boost appetite for EVs in the country.

“Mercedes-Benz plans to have 30 per cent of all its vehicles sold in Malaysia electrified by 2030, as Malaysia offers one of the highest EV penetration rates for its products globally.

“Malaysia has witnessed a large number of automakers entering the market, giving consumers more choices,” said BMI.

It said Tesla agreed to set up a regional headquarters and service facility in Malaysia, while Neta, China’s EV brand by Hozon New Energy Auto, has also entered the local market.

At the same time, BMI noted that Proton Holdings Bhd has revealed a draft version of its road map for electrification that included hybrid, plug-in hybrid EVs, and full battery EVs.

The government also announced the extension of the total import duty exemption for components used in locally assembled EVs until December 2027, as well as the full excise tax and sales tax exemptions for completely knocked down (CKD) EVs, while for completely built-up (CBU) duty exemptions have been extended to December 2025.

“We believe these measures will contribute to overall higher EV sales in the coming years as the cost to purchase EVs is reduced, thus offering better competition against internal combustion engine cars,” said BMI.

The exemption of duties on parts for EVs would stimulate local EV production, as automakers that are already based in Malaysia are incentivised to electrify their model line-ups, it said, adding that the move would also attract new carmakers into the market.

Malaysian-based manufacturers of EV charging infrastructure are also fully exempted from income tax up to 2032.

Commercial EVs are also picking up steam in Malaysia with the entrance of Volvo’s commercial heavy trucks, it said.

Malaysia has set a goal of having 100,000 EVs on the roads by 2030, of which 50,000 are expected to be commercial EVs.

To support EV penetration in Malaysia, the government announced that EVs in Malaysia would not be subject to road tax until Dec 31, 2025. – Bernama