KUALA LUMPUR: Malaysia is at a pivotal moment in its journey towards becoming a significant player in the electric vehicle (EV) manufacturing industry.
The recent withdrawal of Tesla from its plans to set up a factory in Southeast Asia may seem like a setback, but this development offers Malaysia a unique opportunity to reassess its strategy and position itself as a competitive force in the global EV landscape.
Learning from Thailand's experience
Thailand has made significant strides in attracting EV manufacturers, particularly from China. This influx has transformed Thailand into a key automotive hub, but it has also raised concerns about the impact on long-established Japanese brands that have long dominated the local market.
Malaysia can draw lessons from Thailand's experience by striving for a balanced approach that supports both new entrants and existing manufacturers. This balance is crucial for maintaining a diverse and resilient automotive industry that can withstand global market shifts.
Credit must go to the Japanese for building the Thai automotive industry with their long-term presence and well-thought-out development plan, which has culminated in the country becoming a key export hub for various brands from the East.
The deep roots of the Japanese manufacturers have made Thailand the "Detroit of Southeast Asia," and adhering to the Japanese industrial ethos and culture has made the region's automotive industry very resilient in the face of change.
There is no avoiding the Chinese automotive industry as they are fast becoming dominant in the world. It is crucial, therefore, that we collaborate with them in a deliberate manner that is sensitive to local requirements and aspirations, while encouraging them to plant deep roots in the country.
Malaysian Automotive Association President, Mohd Shamsor Mohd Zain said the government should consider the big picture during this time of transition.
"They should look at the overall scenario as there are long term investors which definitely have shown that they have local interest in mind".
Shamsor added that the existing investors are consider new investments in line with their global target for achieving net zero goals which is in line with the country's aspirations.
Fostering local innovation and collaboration
With a strong foundation in automotive manufacturing dating back to the 1960s, Malaysia is well-positioned to become a leader in EV technology.
The country's model for building an automotive industry has relied on strong collaboration between local and international players.
While the electric vehicle industry may appear fundamentally similar to internal combustion vehicle manufacturing, there are key differences that require particular attention, as they are game-changing and open new possibilities for the local scene.
The transition from fuel-burning engines to electric motors means that the industry is shifting from being primarily mechanical to becoming electrical and electronic. This shift will require partnerships with universities and research institutions to develop new technologies and refine manufacturing processes.
Focusing on innovation will be key to ensuring that Malaysia remains competitive in the rapidly evolving EV sector.
Building a sustainable supply chain
The EV supply chain is fundamentally different from that of traditional car manufacturing due to the elimination of several key components, such as the engine, transmission, and fuel delivery system, and the new demands on software to define the vehicle.
A robust supply chain is essential for Malaysia to establish itself as a competitive player in the EV manufacturing space.
Developing local sources for critical components, such as batteries, electric motors, battery management systems, and operating software, can reduce costs and enhance sustainability.
Malaysia's extensive experience in the electronics industry, from microchip manufacturing to producing cameras and household appliances, should be leveraged to support the transition to electric vehicles.
Collaborating with companies specializing in battery technology and recycling will further strengthen Malaysia's position in the global EV ecosystem. Building a sustainable and efficient supply chain is crucial for long-term success in the EV industry.
Government support and policy framework
The role of the Malaysian government cannot be overstated in shaping the future of the EV industry. Firstly, we must commit to the transition and understand that electric vehicles have the potential to address many issues, from localised pollution to overall carbon footprint. More importantly, they have the potential to help everyone economise and save money.
The fundamental premise of the electric vehicle is not performance or comfort, but energy efficiency.
Energy efficiency means we will save money on our daily transportation costs. Electric vehicles are also known for their simplicity, as they eliminate the engine and transmission, two of the most expensive and complex parts of a vehicle. This results in longer service intervals and lower maintenance costs.
Once we understand that electric vehicles are good for the rakyat, and that transitioning to renewable energy not only saves the country a lot of money by drawing on cheaper energy sources, but also lends itself to making Malaysia energy independent, government policies such as tax incentives, grants for research and development (R&D), and infrastructure development for charging stations should not be viewed only as a way to create a favourable business environment, but also as a major efficiency boost to the economy.
This efficiency boost will make us more competitive, attracting international manufacturers and encouraging local startups to enter the EV market, driving further growth and innovation.
Addressing market demand and consumer preferences
Understanding consumer preferences and market demand is vital for Malaysia's success in the EV sector. Conducting thorough market research will allow manufacturers to tailor their offerings to the specific needs and desires of Malaysian consumers.
This may involve producing affordable EV models for the local market while also considering opportunities for export to neighbouring countries.
Recent announcements by Proton that they are developing an all-electric model have generated significant interest in the market, indicating that people are looking at electric vehicles and will potentially gravitate towards the technology once it falls within their price range.
Meeting consumer demand with the right products will be key to driving EV adoption in Malaysia, and to achieve this, we will need partners that are invested in the local industry.
Emphasising regional Asean collaboration
One of the most promising avenues for Malaysia's EV ambitions lies in regional collaboration within the Asean framework.
Asean is recognised as one of the most important automotive markets in the world, and it continues to be very promising as the economies of member countries expand rapidly.
By working closely with neighbouring countries, Malaysia can help create an integrated and competitive EV manufacturing hub in Southeast Asia that is attractive to major global players.
This collaborative approach will not only enhance Malaysia's position but also benefit the entire Asean community by creating jobs, boosting economic growth, and accelerating the transition to electric mobility.
Developing EV infrastructure
While most people are excited by the prospect of new car factories opening on our shores, there are other opportunities that can be captured, such as the design and manufacture of EV chargers.
A small Finnish industrial equipment manufacturer, Kempower, has become a name to be reckoned with in the EV charging world by developing a robust and easy-to-use charging system that offers flexibility to the operator and ease for consumers.
Kempower should serve as a model for Malaysia to emulate, as it has a very limited local market but focused on being the world's best as a natural way of opening global doors.
We also have a strong pool of programmers and electronic engineers, enabling us to focus on battery management software and the car's operating software. These are areas where we can excel without having to invest heavily in manufacturing, which may not be easily scalable in a country with a limited population and market size.
Training and workforce development
As the EV industry grows, so too must the skills and expertise of the Malaysian workforce. Vocational training programmes focused on EV technology and manufacturing processes will be essential to ensure that the country has a skilled labour force capable of meeting the demands of this emerging industry.
The government's recent emphasis on TVET is a good first step, and now the focus should shift slightly to investing in a workforce better attuned to the new reality of the automotive industry. This development will pay dividends in the long run, as Malaysia positions itself as a leader in the EV sector.
Not having an 800-pound gorilla in the picture offers Malaysia an invaluable opportunity to rethink and refine its approach to EV manufacturing.
By fostering local innovation, supporting existing manufacturers, building a sustainable supply chain, and emphasising regional collaboration within Asean, Malaysia can emerge as a key player in the global EV landscape.
The key to success will be balancing the interests of new entrants and established manufacturers while ensuring a diverse and resilient automotive industry that is prepared for the future.