EV prices set to rise, market faces consolidation
By Zuraimi Abdullah, Asila Jalil
KUALA LUMPUR: Automotive industry's key body has raised concerns over the cessation of tax exemptions for fully-imported electric vehicles (EVs).
While supporting the government's long-term goal of developing local EV assembly, the Malaysian Automotive Association (MAA) called for a more balanced incentive structure that supports both completely built-up (CBU) and completely knocked-down (CKD) EVs.
"The EV ecosystem in Malaysia is still in its early stages," MAA said in a 2026 Budget comment.
It stressed that ongoing incentives for imported EVs remain crucial to build consumer awareness, market confidence and demand readiness - all essential for the eventual success of local assembly programmes.
EVs have gained modest traction to make up about five per cent of Malaysia's annual total industry volume after the import and excise duty exemptions were introduced in 2022.
Locally assembled EVs and EV components will continue to enjoy full import, excise and sales tax exemptions until Dec 31 2027.
Industry observers said the tax exemptions for fully-imported EVs, which are set to expire by year end, may drive market consolidation and push prices up by an estimated 30-100 per cent.
This will make many EVs more expensive than internal combustion engine vehicles, they said, adding that a more aggressive price war could erode profit margins and force weaker players to exit.
Fully-imported EVs from Tesla, Zeekr and premium brands could then see sharp price jumps, letting affordable models from BYD, Proton and Perodua steal more market share.
Smaller brands without deep local footprint or CKD plans may struggle or exit, they said.
The potentially significant price increases are expected to dampen consumer demand, especially in the mass-market segment.
They warned that a brand withdrawing from the market could impact resale value, after-sales service, spare part availability and warranty support.
Neverthless, they said big players such as BYD, Chery, Proton, Tesla and newcomers like XPeng, Denza and Zeekr are gearing up for a survival test.
BYD currently dominates with about 35-40 per cent of new EV registrations, bolstered by its broad model range and aggressive pricing.
Proton, with its e.Mas 7, has made a strong second by relying on local appeal and soon adding a more affordable e.Mas 5, whose estimated prices range from RM60,000 to RM80,000.
Consumers may need to back brands with strong aftersales support, spare‑parts networks and long‑term local commitment or risk resale and warranty losses.
Industry specialist Hezeri Samsuri said the removal of the tax exemption may impact automotive sales, but the extent of it will depend on the companies' respective offerings.
"Automotive companies have already taken into consideration what would happen if the incentive is taken away and the price different might not be too big," he said, although acknowledging that prices should theoretically increase by up to 100 per cent.
"Having said that, with the help of contract assemblers in Malaysia, those who want to stay will assemble the cars here.
"This will also wash away fly by night brands, leaving those with long term plans here in Malaysia, which is good for the consumers," he told Business Times.
He added that the cessation is a good move as the government should focus on plans to phase out older vehicles in the market.
"The recent announcement (in the 2026 Budget) that will give Malaysians rebate if they surrender their old cars to buy new Protons or Perodua is a very good move, an indication the government has bigger plans," he said.
In collaboration with national carmakers, the government announced that owners of vehicles order than 20 years will receive a RM4,000 incentive when they buy a new national car.
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