MBSB Research said Monday that completely knocked down (CKD) readiness will mitigate recent policy impact across most electric vehicle (EV) marques in Malaysia.

The research house said in a note that for the auto players under its coverage, it expects limited impact, as most EV marques either already have local assembly operations or are progressing towards localization.

under Budget 2022 and Budget 2023, imported completely built-up (CBU) EVs benefited from import and excise duty exemptions until 31 December 2025, while incentives for locally assembled completely knocked down (CKD) EVs were extended until 31 December 2027.

Following the expiry of the CBU incentive window, the industry initially anticipated a reversion to the pre-existing franchise approved permit (AP) requirements of a minimum MYR 250,000 ($61,561) On-The-Road (OTR) price and 200kW power output.

However, CBU EVs will instead be required to meet a minimum cost, insurance, and freight (CIF) value of MYR 200,000 and motor output of 180kW from July 1, 2026 onwards.

Importantly, ready stock and vehicles already in transit prior to the implementation date are exempt from the new requirements.

The minimum MYR 200,000 ($49,249) CIF requirement effectively pushes the retail price of completely built-up (CBU) EVs above MYR 300,000 ($73,873) because the CIF value only represents the vehicle’s landed cost before taxes and distribution margins.

Once import duty, excise duty and sales and service tax (SST) are applied, the cost rises substantially, and after factoring in distributor and dealer margins, the final selling price can exceed MYR 300,000 ($73,873).

For EVs imported from Europe or South Korea, where import duties are higher than those from China, retail prices could be pushed even higher, potentially exceeding MYR 360,000 ($88,648), according to MBSB.

“Consequently, the new framework significantly raises the entry price for CBU EVs and shifts them towards the premium segment,” it said.

Among the 20 best-selling EV models as of April 2026, only five are unaffected by the new requirements: the Proton e.MAS 5 (which enjoys special dispensation despite being
imported as a CBU from China), Proton e.MAS 7 (CKD), TQ Wuling Bingo (CKD), Volvo EX30 (CKD), and the Zeekr 009, which is already priced above MYR 300,000 ($73,873).

It is noted that among the largest non-national EV brands by market share year-to-date, iCaur has a CKD assembly at Chery’s Shah Alam plant, while MG and XPeng models are
produced via EP Manufacturing’s contract assembly facility in Melaka.

Leapmotor has also commenced CKD production at Stellantis’ Gurun plant, while Zeekr plans to establish its own assembly facility in Tanjong Malim by 2027.

Tesla remains the key exception as its models continue to be imported as CBUs, although it remains unclear whether the latest MITI ruling applies given its separate BEV Global Leaders pathway.

BYD could lose out the most if its localization plans do not come to fruition, as its models remain fully imported, said MBSB.

While importers with ready stock and vehicles already in transit can continue selling lower-priced EVs in the near term, the research house opined that this potentially resulting in a temporary pull-forward in purchases ahead of the implementation date.

It also said the demand is likely to gradually shift towards CKD EVs, internal combustion engine (ICE) and hybrid alternatives, as well as the used-car market once existing
inventories are depleted.

“As such, we maintain our 2026 total industry volume (TIV) forecast of 788,000 units (-4 percent year on year), broadly in line with the Malaysian Automotive Association (MAA)’s projection of 790k units (-3.8 percent year on year),” said MBSB.

It is noted that in the first quarter of 2026, Malaysia’s EV sales remained encouraging at 13,359 units (+25.1 percent quarter on quarter), representing 7.3 percent of TIV of 182,113 units.

However, it is worth noting that the MAA EV data includes both passenger and commercial vehicles, while sales from several high-volume EV brands such as Tesla, Zeekr and XPeng are not captured, as these marques do not report their sales to the association.

As a result, MBSB believes that the actual EV penetration is likely higher than the figures reported by the MAA.

Malaysia EV transition gathers pace, but structural hurdles temper outlook