Analysts have foreseen electric vehicle (EV) momentum is building in Malaysia with an expanding local assembly pipeline.

MBSB Research said in its recent note that EV adoption in Malaysia remains robust, with EV sales by Malaysian Automotive Association (MAA) members jumping to 20,167 units (+102.6 percent year on year) in the first nine months of 2025, driven by a wider model rollout and accelerated purchases ahead of the year-end expiry of completely built-up (CBU) EV tax incentives.

Hybrid vehicle (HV) sales have also expanded robustly in the same period, reaching 27,616 (+20.5 percent year on year).

A series of recent, completely knocked-down (CKD) EV investment commitments align well with the CKD EV tax incentives in place until end-2027, pointing to tangible rollout beginning in 2026.

These include SAIC Motor beginning assembly of one of its MG EV models at EP Manufacturing Berhad’s plant in Pagoh, Melaka, in the first quarter of 2026, BYD’s facility in KLK TechPark, Tanjong Malim, targeted for completion by the second half of 2026, and XPeng, which is likewise expected to start local assembly in the second half of 2026.

However, with Proton having begun assembly of e.MAS 7 and set to start e.MAS 5 productions in first quarter of 2026, together with Perodua’s newly launched QV-E, MBSB noted the competition within the developing EV segment is expected to intensify.

It is noted that Malaysia is targeting xEVs (covering both EVs and hybrids) to reach 20 percent of annual total industry volume (TIV) by 2030, compared to 7 percent as of first nine months of 2025 (9M2024: 5 percent).

MBSB highlighted that supporting this agenda will require continued investment in strengthening EV infrastructure.

According to the Ministry of Investment, Trade and Industry (MITI) Malaysia, about 5,149 public chargers had been installed nationwide as of September 2025, thus, still some distance from the initial year-end target of 10,000 units.

Meanwhile, Nomura Research said in its recent report that Malaysia’s EV transition is expected to be gradual, with EVs targeted to reach 15 percent of new vehicle sales by 2030, according to the government.

“However, EV demand is not expected to peak in the next five years due to infrastructure challenges, and we believe the new petrol subsidy mechanism could slow the shift from internal combustion engines, particularly among middle and lower-income consumers,” said the research house.

While over 5,000 charging stations have been built vs the 10,000-charger target by end-2025, it also opined that high installation costs and lengthy approval processes remain key obstacles to fast EV adoption.

CGS International, on the other hand, said in its recent report that the expiry of excise duty and import tax exemptions on completely built unit (CBU) EVs may increase imported EV prices by 30 percent to 100 percent, likely softening demand for foreign brands.

According to the research house, EVs accounted for about 5 percent of TIV year to date.

Ta Securities also said in a report that Malaysia’s EV landscape would remain crowded and highly competitive with an influx of new entrants, exerting further pressure on both pricing and margins.

“The expiry of the EV CBU tax exemption is also expected to weigh on demand,

“Overall, we anticipate the operating environment for the automotive industry to stay challenging in 2026 with profit margins likely come under even greater strain,” said the research house.

It is noted that the year 2025 also saw several new EVs gaining tractions in the market, with popular models such as the BYD Seal 6, BYD Atto 2, XPeng G6, XPeng X9, Denza D9, and iCaur03 emerging as notable additions to the EV lineup.

These offerings helped broadening consumer choices and contributed to the growing adoption of EVs across the regional market, Ta noted.

It is noted that the local xEV market continues to expand steadily, underpinned by stronger consumer acceptance and a widening range of model offerings.

According to the MAA, combined HV and EV sales have risen consistently over the past four years, reaching 47,800 units in the first nine months of 2025, driven by 27,600 HVs and a notable 20,200 EVs.

“The growth trajectory clearly reflects shifting market dynamics,” said the research house.

It is noted that HV sales have traditionally dominated the xEV segment, but the pace of expansion has begun to moderate since 2024.

In contrast, the EV adoption is accelerating rapidly, surging from just 278 units in 2021 to over 20,000 units in the first nine months of 2025, marking one of the fastest growing categories within the automotive sector.

“This momentum aligns with the intensifying competition in the EV landscape, as more brands enter Malaysia and existing players broaden their portfolios,” said TA.

It opined that the influx of new models, ranging from mass market to premium offerings, would continue to improve affordability and expand consumer choice.

With the expiry of the CBU EV tax exemption in the end of 2025, Ta highlighted that import duty and excise duty will be reinstated alongside the existing 10 percent sales tax.

Market players estimate that prices for popular CBU EV models could rise by 20 percent to 40 percent once these taxes return.

“While a buying spree is expected in the fourth quarter of 2025 as consumers rush to secure CBUs before the deadline, we believe the subsequent price shock could slow the EV adoption over the next two years,” said the research house.

It noted the premium and luxury EV segment, which is entirely dependent on CBU imports, will face the most significant pricing pressure and is likely to experience a steep drop in sales volume.

On the supply side, it also pointed out several brands are accelerating their localization efforts.

BYD has committed to establishing a local assembly plant in Tanjung Malim, with operations slated to begin in 2026.

Leapmotor, through its partnership with Stellantis, is planning CKD production at the Gurun facility.

Meanwhile, Chinese manufacturers such as Chery, which already conducts CKD operations in Malaysia, and Great Wall Motor (GWM) are also expanding their presence or preparing CKD plans as part of their broader ASEAN strategies.

National carmakers like Proton e.MAS and Perodua QV-E are poised also to benefit from the expiry of the CBU EV tax exemption as the policy shift would give them a substantial pricing advantage, according to Ta.

It is noted that the Proton e.MAS 7 has recorded 7,413 units sold as of October 31, 2025, comprising 6,954 units domestic sales and 459 units exports.

Meanwhile, the recently launched Proton e.MAS 5, priced at MYR 65,800 ($16,131) to MYR 69,800 ($17,112), has already attracted 10,000 bookings.

While for the newly launched Perodua QV-E, Ta believes the MYR 80,000 ($19,613) starting price would be poorly received by mass-market buyers.

Analyst foresees EV price competition in Malaysia amid policy changes