KUALA LUMPUR: Malaysia's electric vehicle (EV) market is poised to see a boost in sales from the extension of import duty exemption for components used in locally-assembled EVs until December 2027.
BMI, a Fitch solutions company, also noted that the full excise tax and sales tax exemptions for completely-knocked down (CKD) EVs as well as the extended duty exemptions for completely built-up (CBU) to December 2025 will further strengthen EV sales.
"We believe these measures will contribute to overall higher EV sales in the coming years as the cost to purchase EVs is reduced and offers better competition against internal combustion engine (ICE) cars.
"In addition to this, the exemption of duties on parts for EVs will stimulate local EV production as automakers that are already based in Malaysia are incentivised to electrify their model line-ups.
"The exemption on EV component duties also serves to attract new carmakers into the market," BMI said in a report.
Malaysian-based manufacturers of EV charging infrastructure are exempted from income tax at 100 per cent up to 2032.
Manufacturers of EV charging equipment are also entitled to a 100 per cent investment tax allowance, which can be deducted at 100 per cent of statutory income for a period of five years.
"We forecast EV sales in Malaysia to quadruple in 2023 as the presence of local EV manufacturing from Volvo and Mercedes-Benz boosts appetite for EVs locally.
"The latter has indicated that it plans to have 30.0 per cent of all its vehicles sold in Malaysia electrified by 2030, as Malaysia offers one of the highest EV penetration rates for its products globally.
"Indeed, Malaysia has also witnessed a large number of automakers entering the market giving consumers more choices," it added.
BMI said commercial EVs are also picking up steam in Malaysia with the announced entrance of Volvo commercial heavy trucks.
With road freight a dominant mode of transporting goods in the country, electric heavy trucks will be in focus especially as companies look to scrutinise their supply chains for emissions reductions.
"Malaysia has set a goal of having 100,000 EVs on the roads by 2030, of which 50,000 are expected to be commercial EVs (i.e. buses and trucks).
"However, the lack of large vehicle charging stations and other infrastructure remains a major obstacle to widespread EV adoption, especially in rural areas.
"The government has adopted several measures to support EV infrastructure development in the country, such as offering tax incentives to companies that invest in electric vehicle charging stations and setting a target of installing 125,000 electric vehicle charging stations across the country by 2030," added BMI.