Malaysia’s electric vehicle (EV) market is gaining momentum, with year-to-date sales more than doubling in the first eight months of 2026 as automakers shift towards locally assembled models, while competition from Chinese brands and national marques is reshaping the automotive market, according to Kenanga Research and BIMB Securities.
EV sales reached 47,508 units in the January-August period, up 103% percent from a year earlier, Kenanga Research said in a report. This follows a sharp increase in battery electric vehicle (BEV) registrations in recent years, from 270 units in 2021 to 2,600 units in 2022, 10,000 units in 2023, 21,789 units in 2024 and 44,813 units in 2025.
BEVs accounted for about 5.5 percent of total industry volume (TIV) in 2025, Kenanga said.
The research house expects the transition towards BEVs to remain gradual, despite the strong growth in EV sales, as infrastructure constraints and Malaysia’s subsidized fuel pricing mechanism continue to reduce incentives for middle- and lower-income consumers to switch from internal combustion engine vehicles to EVs.
Kenanga said it has a balanced view that EV adoption will eventually accelerate and demand for gasoline-powered vehicles will eventually peak, but it does not expect that to happen within the next five years.
“While the EV market is expanding rapidly, the transition to BEVs remains gradual,” Kenanga said, citing infrastructure challenges and the continued availability of subsidized fuel.
The near-term EV market is also being influenced by the transition from completely built-up (CBU) imports to completely knocked-down (CKD) local assembly.
Kenanga said August recorded the biggest monthly growth in the EV market, driven primarily by Proton e.MAS 5, while other EV brands were affected by depletion of CBU inventories as automakers transition towards CKD production.
BIMB Securities said the key theme for Malaysia’s automotive sector is shifting from headline TIV growth towards market-share migration and EV localization.
The government’s continued tax incentives for locally assembled EVs through 2027 are expected to support the shift towards CKD production and strengthen the competitive position of automakers with expanding EV line-ups, BIMB said.
Proton is emerging as a major contributor to the national segment, supported by rising S70 volumes and the scaling up of its e.MAS 5 brand, while Perodua has shown improving monthly momentum following strategic price adjustments, BIMB said.
Traditional foreign marques are facing increasing competition from national brands and Chinese automakers, it added.
Tesla, however, recorded a significant tactical improvement in August, surpassing BYD amid aggressive promotional financing and localized delivery activity, according to BIMB.
The growth of Chinese brands is expected to remain an important feature of Malaysia’s automotive market as more manufacturers localize production.
Kenanga said the localization program includes Jaecoo and Chery models from Chery’s Shah Alam assembly plant, as well as Xpeng, GWM, BAIC and SAIC models from EPMB’s Melaka assembly plant.
BYD could potentially be assembled at Inokom Corp Sdn Bhd’s facility in Kulim, Kedah, while Zeekr is expected to be produced at Proton’s Tanjung Malim plant, Kenanga said.
The shift towards local assembly follows the expiry of tax incentives for CBU EVs, while incentives for CKD EVs continue through 2027.
The two research houses nevertheless expect Malaysia’s overall automotive market to remain relatively resilient despite a decline in August sales.
Kenanga said August total industry volume (TIV） fell 3 percent month-on-month and 4 percent year-on-year, partly due to a shorter working month and two public holidays — Prophet Muhammad’s Birthday on August 25 and Merdeka Day on August 31.
Cumulative TIV reached about 530,000 units in the first eight months of the year, up 2 percent year-on-year and within Kenanga’s expectations.
Kenanga maintained its 2026 TIV forecast at 800,000 units, representing a 3 percent decline from 2025 and matching the forecast by the Malaysian Automotive Association (MAA).
BIMB maintained a slightly lower 2026 TIV forecast of 790,000 units, saying cumulative industry sales remained resilient and were tracking within expectations.
To achieve its 790,000-unit forecast, BIMB said monthly industry sales would need to average about 65,810 units from September to December, broadly in line with the year-to-date average of 65,840 units.
Kenanga expects overall demand to be supported by discounts and rebates, delayed implementation of the new open-market-value (OMV) excise-duty regulation, an increasing number of localized Chinese models and new launches focused on value-for-money offerings.
The research house expects discounting to remain a strategy for automakers seeking to gain market share, although this could come at the expense of margins.
It said automakers have begun looking towards other higher-margin businesses or segments to offset pressure from automotive competition.
Sime Darby, for example, could benefit from its industrials division, which has a higher margin than its automotive business, while Bermaz Auto is focusing on the CBU market, which is less affected by the open market value (OMV) policy. Hong Leong Industries is also focusing on its higher-margin premium motorcycle segment, Kenanga said.
The new OMV excise-duty regulation, which was originally expected to take effect earlier, has been delayed to January 2027 and could be pushed back further, Kenanga said.
The government has also implemented a pre-tax cost, insurance and freight (CIF) floor price of MYR 200,000 ($48,936) for imported EVs from July 2026.
Kenanga said the policy framework governing potential vehicle price increases is still being developed and could be delayed beyond the next general election period.
The research house expects national marques to remain dominant in the affordable vehicle segment, estimating that they will account for about 67 percent of 2026 TIV.
Non-national marques are largely concentrated in vehicles priced at RM100,000 and above, it said.
Demand is also expected to benefit from upcoming new models, including the Proton e.MAS 7 PHEV and EV Premium Plus, the next-generation Perodua Myvi, Xpeng’s MO 3 sedan and BYD’s Shark PHEV 4×4.
Industry earnings visibility remains supported by a booking backlog, although Kenanga said bookings stood at about 113,000 units at end-August, below the 2025 average of 140,000 units.
The lower backlog was partly due to production constraints, including Perodua limiting capacity ahead of upcoming new models, as well as changes in market share, it said.
More than half of the backlog comprises new models, suggesting continued consumer interest in recently launched vehicles.
Kenanga expects EV sales to remain robust in the near term as global automakers clear existing CBU inventories while transitioning to CKD production.
Proton, which is already rolling out the e.MAS 7 and e.MAS 5 EVs from its Tanjung Malim plant, is expected by Kenanga to maintain an EV market share of between 40 percent and 50 percent.
Malaysia’s EV policy is targeting EVs to account for 20 percent of new vehicle sales by 2030, with a longer-term target of 80% by 2050, including hybrids.
The government is also expanding charging infrastructure, revising its target to 30,000 public charging points by 2030 from the earlier target of 10,000 by 2025.
As of July 2026, Malaysia had 6,904 public charging bays, comprising 4,665 alternating-current chargers and 2,239 direct-current chargers.
BIMB said resilient TIV and accelerating EV adoption should support automotive-sector earnings, but intensifying price competition remains the key risk to margins.
The research house said the increasing localization of EV production could alter the competitive landscape as national brands, Chinese OEMs and established foreign automakers compete for market share.
Kenanga similarly expects the industry to remain supported by new model launches and demand for affordable vehicles, while the shift towards localized EV production should continue to influence sales patterns.
The research houses therefore see Malaysia’s automotive market entering a phase in which EV adoption and localization, rather than overall TIV growth alone, will increasingly determine changes in market share and competitive positioning.