Malaysia Doubles Minimum Import Price on EV to Stop
China
The move was a tacit acknowledgment of China’s
dominance in the global market and the power of its automakers to keep prices low.
1. End of
Tax Holiday
·
Malaysia ended import tax exemptions on electric
vehicles (EVs) on Dec 31, 2025.
·
Earlier policy had enabled rapid entry of foreign
EVs.
2. Rise
of Chinese Automakers
·
Companies like BYD and Chery dominated Malaysia’s
EV market.
·
Popular models like BYD Atto 3 were imported
in large volumes.
3. New
Import Restrictions
·
Minimum price for imported EVs doubled to
200,000 ringgit (~$50,000).
·
Aimed at limiting cheap imports.
4. Push
for Local Manufacturing
·
Government encouraging foreign firms to assemble/manufacture
locally.
·
Offers tax incentives for setting up plants.
5.
Conditions for Foreign EV Makers
·
Only 20% of locally assembled cars can be sold
domestically.
·
Remaining 80% must be exported.
·
Minimum selling price for locally made EVs: 100,000
ringgit.
6.
Company Responses
·
BYD is reviewing plans for a plant in Perak.
·
Chery is moving ahead with a plant near
Kuala Lumpur.
7.
Support for Domestic Carmakers
·
Local firms like Proton and Perodua
have launched EVs.
·
Proton’s e.MAS
5 significantly outsold BYD’s Atto 3 in early 2026.
8.
Broader Policy Objective
·
Protect local jobs and industry.
·
Reduce reliance on imported vehicles and
components.
·
Encourage domestic value addition.
9.
Strategic Challenge
·
Reflects global concern over China’s low-cost
manufacturing dominance.
·
Governments balancing:
o
Affordable EV adoption
o
vs. protection of domestic industry
10.
Overall Impact
·
Likely to slow cheap EV imports.
·
Push global automakers toward local production.
·
Strengthen Malaysia’s automotive ecosystem in
the long run.
Four
years ago Malaysia waived import taxes on electric cars,
part of a plan to move away from fossil fuels.
The
country was not making electric vehicles at the time, and Chinese automakers started
shipping models like the BYD Atto 3 by the thousands. Soon Chinese companies came
to dominate Malaysia’s small but growing E.V. market.
But
the import-tax holiday ended on Dec. 31, 2025. More recently the Malaysian government
announced new restrictions on imported cars. The minimum sale price of imported
E.V.s is being doubled to 200,000 ringgit or about $50,000, according to Johari
Abdul Ghani, Malaysia’s trade minister.
The
aim is to protect jobs because Malaysia’s own carmakers are now making E.V.s. The
government is hoping to push Chinese companies to assemble and manufacture vehicles
in Malaysia.
China
has flooded countries around the world with exports, often at low prices. The policy
changes in Malaysia show how China’s manufacturing heft can force governments to
make tough choices between promoting its auto industry and creating jobs, while
protecting homegrown companies from foreign competition.
Two
of the Chinese carmakers operating in Malaysia, BYD and Chery, would benefit from
tax incentives the government is offering to companies that set up assembly plants.
The companies will also face Malaysian government rules that apply to all foreign
E.V. makers: Only 20 percent of the cars the plants make can be sold in Malaysia
— the rest must be exported — and have to be sold at a minimum price of 100,000
ringgit.
“In
the long run, we want to ensure that manufacturers produce car components in Malaysia
for assembly, rather than relying heavily on imports,” Mr. Johari said in an interview.
It
was unclear if BYD, which was slated to build its assembly plant in the state of
Perak, will go forward with its plans. The company said it is “still reviewing all
possibilities and aligning internally,” declining to elaborate.
Chery,
however, is moving forward with its plans to build an assembly plant on the outskirts
of Kuala Lumpur, the capital city.
Men
Lin Bo, an executive vice president at Chery Corporate Malaysia, said the company
had begun building the facility, which will produce gas-electric hybrid and gasoline-fueled cars. “Construction at the site is ongoing and progressing
well. We hope to produce some cars by this year,” he said.
The
rules limiting domestic sales do not apply to foreign manufacturers that use the
three existing assembly plants in Malaysia, the trade ministry said.
“E.V.
makers will be considering whether it makes sense to set up manufacturing facilities
in Malaysia if they already have plants elsewhere in Southeast Asia,” said Ramone
Mikgail Kok, the investment research and advisory head at Hong Leong Bank based
in Kuala Lumpur.
The
rise of Chinese automakers can be seen across Malaysia’s car districts. An area
about 20 minutes from Kuala Lumpur, which was long dominated by Japanese and European
brands, now includes several Chinese automakers.
Malaysia’s
biggest domestic carmakers, Proton and Perodua, each introduced
electric vehicle models last year. Perodua spent over
$200 million developing the QV-E, its first electric model. Proton, in the first
three months of the year, sold 6,701 of its e.MAS 5 electric
car, far outpacing the 999 units of BYD’s Atto 3. Geely,
a Chinese automaker, owns 49.9 percent of Proton.