THERE are too many chargers in Malaysia for them to make money, and that's not enough.
This headline may sound nonsensical, but it reflects the current state of the Malaysian automotive market regarding electric vehicle (EV) growth. In fact this is the current state of affairs globally.
So, Are There Enough Chargers?
Consumers interested in purchasing an electric vehicle often ask: Are there enough chargers in the country to support the growing EV market?
Several major factors influence why average buyers prefer conventional internal combustion cars over electric vehicles: price, charging time, and lack of charging infrastructure.
The issue of price is gradually diminishing, as many electric vehicles are now priced below RM200,000, with a significant proportion available under RM150,000.
As prices approach the mass market level - specifically below RM100,000, where 80 per cent of car buyers reside - more individuals are considering EVs for the first time.
This leads to the next concern: where can they charge their cars?
And this brings us back to the fundamental question of whether EVs or chargers should come first: the classic chicken or egg dilemma.Countries worldwide grapple with this dilemma.
The rollout of new infrastructure is costly, requiring substantial justification for investment and Governments must decide whether to incentivise the private sector to participate because EV chargers are not cheap.
A rough estimate suggests that for every kilowatt a charger can deliver, it costs between RM1,000 to RM1,250 to purchase and install. Therefore, a charger capable of delivering 100 kW would likely cost around RM125,000 in total.
In business, the critical factor is not just the cost but the ability to recover that cost in a reasonable timeframe, which depends on the number of electric vehicles on the market.
The Current Landscape
Waiting until millions of electric vehicles are on the road before deploying chargers creates a paradox: without sufficient chargers,
EVs remain impractical, hindering their adoption. Currently, most charge point operators (CPOs) acknowledge that they will not make money immediately; this is an investment in the future.
As long as they can manage their expenses, this strategy may pay off in the not-too-distant future.
According to Tengku Datuk Seri Zafrul Abdul Aziz, International Trade and Industry Minister, as of June 25 thisz year, a total 2,585 EV chargers had been installed nationwide, with 600 being fast chargers.
Meanwhile, about 25,000 electric cars are currently on Malaysian roads, resulting in a ratio of 41 cars for every charger.
This positions Malaysia similarly to Thailand, Indonesia, and Qatar, and ahead of Singapore, Japan, and Canada, as noted by Roland Berger, a research house that ranks countries' charger networks.
Notably, Malaysia also surpasses China, Germany, and the United Kingdom, and is ahead of Norway, which has converted nearly all its new car sales to EVs.
Statistical Insights
So, does this mean we have too many chargers? Statistically, yes. For instance, China, which leads in EV sales growth, has a ratio of 82 cars per charger, while Norway maintains around 60 cars per charger.
From a CPO's perspective, they need about 10 cars visiting each charger daily to break even. This figure is reasonable compared to the traffic at petrol stations.
Currently, each charger in Malaysia sees only two to three cars daily, far below the break-even point.
To reach the break-even point, Malaysia would need around 75,000 EVs, translating to a ratio of about 125 cars per charger, which is still one-third more than the ratio in China. This means that China also has too many chargers, statistically.
Why is it that, despite knowing they cannot break even right now, companies continue to install chargers?
This forward-looking strategy reflects the belief that charging infrastructure must grow ahead of EV adoption to attract buyers at various stages of the technology adoption curve.
The Technology Adoption Curve
Currently, EV buyers are primarily innovators - individuals eager to embrace new technology despite its challenges.
The next stage in Malaysia's adoption curve includes early adopters, who are still technically minded but slightly less risk-averse.
They are willing to navigate the learning curve associated with early adoption, often utilising apps to plan their journeys.
Data indicates that most EV owners with home charging access will charge their vehicles at home 70 per cent of the time, and anecdotal evidence indicates that once they become owners, they don't really complain about chargers or range anxiety.
As more affordable EVs enter the market, manufacturers may encounter a barrier known as the "chasm of confidence" in the technology adoption curve. This gap exists between the expectations of early adopters and those of mass-market buyers.
Mass Market Considerations
Mass-market buyers will only convert to new technology when it is faster, cheaper, and better than their current options.
All three factors must align before they feel confident making the switch, and for this group, the current charging infrastructure is insufficient to eliminate their concerns.
This cautiousness is not unique to electric cars. For instance, when automatic transmission was first introduced in the 1950s, it was limited to luxury vehicles and only became mainstream in Malaysia in 1985 with the Proton Saga.
Many consumers hesitated, fearing that automatic gearboxes would not last as long as manual ones.It took nearly 20 years for automatic transmission to comprehensively replace manual gearboxes.
As Proton prepares to launch its first battery electric vehicle (BEV) and Perodua gears up for its electric campaign and begins offering them at mass market prices below RM100,000, we will likely begin to shift into the early mass market buyers.
These new buyers will be far more demanding, and the Malaysian market will enter the chasm in 2026 or 2027.
These expected temporary slowdowns would mirror the experience of Norway, China, and Europe, where EV sales would stagnate as hybrid and plug-in hybrid sales grow.
Hybrid and PHEV sales growing was not a sign that BEV sales would taper off permanently, but rather it was an indication that mass-market buyers now have an appetite for electric vehicles but are holding back due to concerns about charging and range.
For them, an electric car must represent a significant improvement over their current vehicle, without any caveat of requiring additional time or effort to find chargers.
Mass-market buyers expect to see one charger for every petrol pump, if not more, due to the longer charging times associated with EVs.
Therefore, until we reach a new equilibrium, chargers will always have to stay ahead of EV sales.
This means that the Malaysian government needs to have a more comprehensive charger incentive program in place within the next couple of years, in anticipation of the jump to mass market adoption of EVs.