2026 would be a pivotal year for electric vehicle (EV)-related foreign direct investments (FDIs) in Malaysia following the expiry of completely built-up (CBU) incentives, Maybank Investment Bank said Tuesday.

The research house said in a note that Malaysia’s automotive policy stance continues to prioritize national marques, which could shape competitive dynamics going forward.

It noted recent news suggesting a potential delay in BYD’s completely knocked down (CKD) plans, pending further alignment with Ministry of Investment, Trade and Industry (MITI), highlights the ongoing need for coordination between foreign OEMs and local policy requirements.

“This could be supportive of domestic players. Between the two national marques, we see Proton as the stronger proxy to the EV transition, given its solid EV sales traction to date, despite the still-limited depth of the local EV supplier ecosystem,” said Maybank.

In the event that BYD’s localization plans are delayed or scaled back, it noted Proton could emerge as a key beneficiary, as its eMAS series competes directly within the same EV segment.

It is noted that Proton has emerged as a key beneficiary following the launch of the eMAS 5 in October 2025, which has since positioned it as the top-selling EV brands in Malaysia in 2026.

“Its robust new launches pipeline, coupled with strong government alignment, places it in a favorable position to capture further market share, which has increased from 18 percent in 2025 to 28 percent year to date,” said Maybank.

However, the research house noted the evolving geopolitical backdrop, particularly Middle East tensions and oil price volatility, adds another layer of uncertainty, which it believes could delay policy implementation timelines (e.g. open market value [OMV] in mid-2026, future EV incentives and support framework) and, in turn, influence foreign original equipment manufacturer (OEM) investment decisions.

“All else equal, any slowdown in foreign OEM FDIs could further strengthen Proton’s relative positioning, making it a key beneficiary,” it added.

Meanwhile, December 2025 marked a record-breaking month in Malaysia’s car industry, lifting 2025 total industry volume (TIV) above Maybank forecast of 790,000 unit to another new record of 821,000 units.

“Malaysia also overtook Indonesia to become the largest auto market in ASEAN in 2025,

“The outperformance was partly driven by strong 4Q25 EV sales, as consumers frontloaded purchases ahead of the expiry of CBU EV tax incentives,” said Maybank.

Post-incentive expiry, the research house has yet to observe meaningful price increases for CBU EVs.

It opined that this is likely cushioned by pre-imported inventory, which should provide distributors/OEMs with 1–2 quarters of buffer as they transition towards CKD/semi knocked down (SKD) localization plans.

Analysts foresee gradual transition to battery electric vehicles in Malaysia