A FULL tax exemption alone is not enough to boost sales of electric vehicles (EVs) in Malaysia, Malaysian Electric Vehicles Owners Club president (MyEVOC) Shahrol Azral Ibrahim Halmi said.

Although he lauded the move announced in the tabling of Budget 2022, Shahrol said all proposed tax and duty exemptions are unlikely to entice people to switch from conventional vehicles to EVs.

A major disincentive to make the switch is the lack of support infrastructure to drive a EV in this country, he told The Malaysian Insight.

“The tax exemptions for battery EVs are welcomed by those who are already keen to replace their internal combustion engine cars over the next two years.

“However, concerns about the maturity of Malaysia’s public charging networks is a factor when deciding whether to purchase an EV,” Shahrol, a co-founder of MyEVOC, added.

He said Malaysia lags behind its regional peers when it comes to EV charging stations.

There are about 500 public AC charging stations throughout the country, and only nine public DC fast-charging stations, with another 10 in development.

Compared with Malaysia’s immediate neighbours, Thailand has 1,406 public AC charging stations, and 771 public DC fast-charging stations, while Singapore has 61 DC fast-charging stations.

Government agency Greentech Malaysia, which is under the then energy, science, technology, environment and climate change ministry, promised in 2015 that there would be 25,000 EV charging stations by 2020.

However, Malaysia has only managed to achieve about 2% of the original target.

In August, the Malaysia Automotive Robotics and IoT Institute and the Malay Vehicle Importers and Traders Association of Malaysia announced a collaboration that entails bringing EV infrastructure to Malaysia by setting up a network of 1,000 DC charging stations for EVs by 2025.

Following the decision to exempt tax for EVs, the Selangor government announced it was aiming to install 10,000 charging stations across the state by 2025, with the first 1,000 stations expected to be ready next year.

Although Malaysia is behind Greentech’s target, Shahrol is still optimistic that the tax incentives will gradually encourage “early adopters”.

It will be a gradual process, and the transition is not expected to happen in the next couple of years due to supply issues related to the Covid-19 pandemic.

“There may be a lack of EV infrastructure but the EV incentives will enable initial purchases by the ‘early adopter’ group, and they in turn will help drive the growth of charging infrastructure,” he said.

“This in turn can encourage the next, bigger group of consumers to make the leap to EV.

“The big question is, can all of this happen within the 2022-2023 period, especially given the global EV supply constraints brought about by the Covid-19 pandemic?”

Price factor, lack of implementation details

While there is growing interest in EVs, especially among younger motorists, Shahrol said the price of vehicles is still putting off potential buyers.

With price being a hindrance, Shahrol said there are fewer than 500 EVs on the road as of this year.

With the tax exemptions, Shahrol is only expecting some 200 EVs to be sold in the coming year.

Currently, the EV models that are available in Malaysia include BMW, Nissan and Porsche.

Hyundai is slated to release its EV in Malaysia next year.

Prices for an EV range from RM150,000 up to RM1 million, with the most expensive being the Porsche Taycan.

Shahrol owns a Tesla Model S75.

While Tesla is not officially available in Malaysia, parallel importers do bring in some grey-market units and have a local price list.

Malaysia has been falling behind in phasing out petroleum vehicles for cleaner electric options, and the push to promote EVs is part of Putrajaya’s goal of becoming a carbon-neutral country by 2050.

Promoting EV usage is also part of the National Automotive Policy (NAP) 2020.

But Shahrol said that apart from the broad statement of goals to promote EV use, the NAP lacked clarity on implementation. This is why Malaysia is slower than regional counterparts in phasing out combustion engine vehicles.

“Singapore, for example, announced their commitment to decarbonise transport in their Budget 2021, which included plans to grow the charging infrastructure as well as to reduce taxes on EVs.

“Thailand created a special steering committee chaired by the deputy prime minister to drive EV adoption as part of their industrial policy last year.

“There are many factors at play when we talk about increasing EV adoption in Malaysia – cost to purchase, cost to operate, concerns about access to charging at home, at work and on trips and above all the emissions reduction from moving from internal combustion engine to EV.

“These factors span across multiple ministries and their policies need to be better coordinated and their implementation carefully managed,” he said.

Shahrol also proposes a ministerial-level implementation steering committee that has the mandate to set targets, milestones and solve problems along the way.

Shahrol is confident that EVs will sooner or later replace the internal combustion engine vehicles, because the benefits are obvious.

“There are tremendous benefits to the environment, people and industry if this transition is proactively managed.

“There’s momentum building and we as a country need to seize this opportunity to decarbonise the transportation sector, which is the second largest emitter of greenhouse gases,” he said. – December 18, 2021.