After 35 years of Proton, this is the time for the Malaysian Family government to think about making electric vehicles (EVs) as affordable as petrol-powered cars in the RM100,000 to RM200,000 bracket.
Wherever in the world EVs are popular, it has been due to government subsidies and incentives.
China is the world’s largest EV market and it got there by subsidising EV prices so that car buyers would have a price competitive choice vis-à-vis internal combustion engine cars.
Norway is another good example. About 60% of new car sales are EVs because of incentives such as reduced vehicle registration taxes, zero VAT, reduced company car tax and road toll exemption, permission to drive on bus lanes and free access to ferries.
Conversely, it penalised ICE cars by taxing them based on the amount of carbon emitted.
It’s all about government policy.
Malaysia had its National Car policy and later, its Jinxed National Automotive Policy.
Proton and later, Perodua, enjoyed preferential treatment, especially in tax incentives, resulting in competitive pricing leading to volume sales. With the volume sales, it contributed to the feasibility of localisation.
Malaysia’s automotive parts vendors depend on these two national car brands to survive.
As the CEO of three global automotive franchises in Malaysia observed: “The only problem is that the supporting technical partners don’t export and therefore growth potential is limited.
“Perodua aka Daihatsu has its own manufacturing footprint in Asean. The only hope now is for Geely to make Malaysia its base for RHD (right-hand drive) production. Japanese manufacturers won’t do that.
“Other manufacturers are now seeking incentives from our government to make Malaysia their Asean footprint as vendors in Malaysia are independent unlike Thailand or Indonesia where the supporting vendors are all from Japan and Japanese transplants.
“If we get our act right, we can secure opportunities from European, South Korean and Chinese manufacturers to make Malaysia their manufacturing base for Asean and emerging markets,” he said, declining to be identified.
After 64 years of Merdeka and this coming November’s global agenda for decarbonisation at the UN COP26 in Glasgow, England, this is the Malaysian Family government’s opportunity to replace the National Automotive Policy and Malaysia’s 5-year plan with a 10-year Decarbonisation Plan.
To offset the cost of a subsidy for EVs, the subsidy on petrol and diesel for land transport has to go. Hydrocarbon fuel subsidy is unsustainable for Malaysia on two counts: Malaysia is already a net importer of land transport fuel, and a subsidy on hydrocarbon fuel is a retrogressive step which promotes carbon emission.
Thailand is already executing its third step into the EV age, following its success in becoming the Detroit of Asia, by offering investment incentives for eco-cars and EVs in a similar fashion to how it succeeded with pick-up trucks and then passenger cars.
Two Chinese carmakers have been attracted, the latest being Great Wall Motor which announced in February that it will build a series of cars, of which one will be its popular EV, the ORA “Good Cat”.
SAIC or previously known as Shanghai Automotive Industrial Corporation was the first in Thailand a few years ago with its MG cars and an EV, the MG ZS EV. But sales haven’t picked up because it’s not an affordable alternative.
The opportunity for Malaysia therefore is to have a policy to subsidise the price of EVs to be price competitive at the popular price band so that there is enough volume of business to attract investments into the ecosystem of EVs.
It cannot be any earlier for Malaysia to position itself as the EV hub of Asean and to ensure a migration path for the 700,000 workers who work in the RM30 billion a year ICE automotive sector. A sector which is going the way of dinosaurs.
Now is the moment for Malaysia to institute a decarbonisation policy that will create a new generation of employment in renewable energy, a green hydrogen economy, an industry 4.0 revolution of innovation, digitalisation, IT and computing.
The views expressed are those of the writer and do not necessarily reflect those of The Independent.
