Greater KL: Asia Pacific’s Hub for Electric Vehicle Innovation

15 June 2023

The ASEAN electric vehicle (EV) market was valued at US$498.9 million (RM 2.31 billion) in 2021, and is expected to reach US$2.7 billion by 2027, at a compound annual growth rate (CAGR) of 32.7%.

Malaysia is banking on innovating within the EV supply chain thanks to its strong background in the diverse electrical and electronic products (E&E) industry for the past half-century.

The substantial size and diversity of the local E&E ecosystem and SMEs can support the manufacturing and assembly of EVs due to the presence of a mature technological topography that spans through R&D of crucial component manufacturing, (such as sensors and transceivers) that will eventually spur technology transfers and developmental know-how for the local automotive industry.

Cognisant of the need to carve out a niche in the burgeoning EV industry, Malaysian policymakers and regulators have been quick to issue policies governing and guiding the growth of the local EV ecosystem.

In response, both foreign investors and local champions have made inroads into the EV sector. The Malaysian Investment Development Authority (MIDA) approved 54 projects totaling RM22 billion in the EV and its related ecosystems from 2018 to 2022. The approved investments include the activity of EV assembly, manufacturing of EV parts and components, and EV charging components.

POLICIES & INCENTIVES

LCMB Outlines Ambitious EV, Charging Targets

The Low Carbon Mobility Blueprint 2021-2030 (LCMB) aims to have 700,000 EVs on the road by 2030, up from the current 2,000, by increasing charging infrastructure and proposing a matching grant for research and development (R&D) in the EV industry, specifically catered for the automotive industry.

EV batteries and charging facilities play a key role in this, as the LCMB aims to achieve at least 15% of EV out of the total industry volume (TIV) by 2030, with 10,000 units of charging facilities built by 2025 (comprising 9,000 alternating current (AC) units and 1,000 direct current (DC) units).

Tax Exemptions for EV Buyers, Charging Equipment Manufacturers

The recent Budget 2023 announcement extended the current import duty and excise duty exemption for fully-imported (CBU) EVs to December 31, 2025. It was originally set to end on December 31, 2023. The Budget also extended the excise duty and sales tax exemption for locally-assembled (CKD) EVs until December 31, 2027, two years more than the original deadline.

The government is providing manufacturers of EV charging equipment 100% income tax exemption from the years of assessment 2023 to 2032. It will also offer these manufacturers 100% investment tax allowance for a period of five years.

LOCAL CHAMPIONS

Greatech Makes An RM1.3b Bet

In February 2023, local champion Greatech Technology Berhad (Greatech), broke ground on the construction of a new 500,000 sq ft facility that will be constructed across 11.58-acre land in Batu Kawan Industrial Park, Penang. Upon the completion of BK IV, Greatech will have a total combined floor area of more than 1.2 million square feet. Greatech invested approximately RM1.3 billion for this expansion with an estimated capital expenditure of RM200 million and an estimated operating expenditure of RM1.1 billion.

Greatech’s capabilities in developing factory automation systems; and related modules and components for EV, solar and medical devices, will create employment opportunities for local talent and boost the industry ecosystem’s growth.

Elitesoft Revs Up E-Motorcycle Sales

Elitesoft is a leading supplier of international electric motorcycle and scooter brands such as Surron, Super Socco, Go Trax and Yamee in Malaysia. In February 2023, Elitesoft signed a memorandum of understanding with Roda Prestasi Sdn Bhd, One Mobile Care Sdn Bhd, and three international companies namely: Super Soco, Sarkcyber Technology (Shanghai) Co Ltd and Xiamen Ampace Technology Ltd.

The collaboration with Xiamen Ampace will involve the transfer of technology and expertise in battery manufacturing specifically for EVs in Malaysia as well as the development of an EV battery manufacturing plant in the country, while Elitesoft provides an EV battery disposal and recycling centre. Fuelled by these collaborations, Elitesoft aims to double the company’s total sales of EVs to RM10 million this year compared to RM5 million previously.

TNB Expands Charging Ranges

Understanding the range anxiety of EV users on long haul journeys, the national electricity company Tenaga Nasional Berhad (TNB) announced in April 2023 that it is collaborating with the nation’s largest toll expressway operator PLUS Malaysia Bhd (PLUS) to build EV chargers along the main throughway for Malaysians travelling across the country.

TNB and PLUS plan to build 18 charging points at nine rest and service areas along the North-South Expressway and East Coast Expressway Phase 2 by the end of 2023. Currently, TNB has six charge points in three locations on both expressways and they are open 24/7. TNB expects the EV market to generate an annual electricity revenue of RM1.25 billion and have 18,000 charging points for 524,409 battery EVs by 2030.

FOREIGN INVESTORS

Automotive High-Tech Valley’s RM30b Boost

In April 2023, it was announced that Chinese automaker Zhejiang Geely Holding Group Co Ltd will invest RM30 billion in the development and commercialisation of the Automotive High-Tech Valley (AHTV) in Tanjung Malim, Perak.

AHTV will open a new chapter in the electric vehicle (EV) ecosystem in Malaysia and it encompasses the automotive and mobility value chain, from high-tech global research and development centres and related support services for the new energy vehicle industry in Malaysia.

Automotive High-Tech Valley’s RM30b Boost

In May 2023, Chery, one of the leading automakers in China partnered with Inokom, to roll out CKD models from its 200-acre Kulim plant for export to Thailand, Singapore, Brunei, Vietnam, and Australia.

While the initial Omoda 5 and Tiggo 8 Pro SUVs to be assembled in Malaysia will be ICE (internal combustion engine)-powered, but local manufacturing of plug-in hybrids and full EVs are on the cards.

Chery also announced that Malaysia will be its production hub in ASEAN, as well as plans to set up and R&D centre encompassing regional testing, training, and parts distribution, contributing to a significant amount of investment to be realised in the country.

Tesla Enters Malaysia

In March 2023, the Ministry of Investment, Trade and Industry (MITI) announced that Tesla Motors would be establishing a Malaysia office complete with car sales, service centres, and a supercharger network.

Tesla is the first applicant of BEV Global Leaders initiative, a measure to help boost BEV (battery EV) demand in the country and promote the development of an ecosystem to support BEV adoption.

MITI Minister Tengku Zafrul Aziz said Tesla decided to invest in Malaysia thanks to the country’s standing as the world’s seventh largest producer in E&E and semiconductor products.

SKC Explores Additional EV Investments

SK Nexilis, a copper foil producer for South Korean EV battery manufacturer SKC, announced its first overseas production base in Kota Kinabalu, Sabah in January 2021, with a total investment value of RM2.3 billion. The copper foil manufacturing facility has an annual production capacity of 50,000 tonnes, which will triple SK Nexili’s copper foil production capacity to about 100,000 tonnes.

Two years later in March 2023, SKC began exploring the possibility of making additional investments in the EV segment in Malaysia due to increasing demand for Li-ion batteries in various industries worldwide.

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