Incentives do not guarantee success, however. Malaysia terminated its tax breaks for EVs in 2014 after failing to persuade manufacturers to invest. It has abandoned a commitment to waive import duties on 100 Tesla cars, a plan announced by Prime Minister Najib Razak during his visit to Tesla's headquarters in California last year.
Instead, the Malaysian government now prefers to deal with manufacturers individually, a strategy that appears to be working with Chinese companies. Beijing Auto International Cooperation, the second-largest EV maker in China, unveiled its first model for the Malaysian market, the EV200, last November. The car has a range of 200km and is expected to be on sale in 2018 at the earliest.
Malaysia should also benefit from the acquisition of a 49.9 per cent stake in its domestic manufacturer, Proton Holdings, by Zhejiang Geely, the Chinese group that also owns Volvo. The partnership potentially means access to Geely's wide range of products and technology, including its Emgrand EV300, China's bestselling electric car.
Partnerships with Chinese companies also mean access to batteries. According to the Yano Research Institute, a Japanese market research company, China currently controls about 75 percent of the global market for electrolyte solutions - a key component of lithium-ion batteries.
These developments should lead to EVs catching on in Malaysia more quickly. However, this is contingent on the appeal of Chinese brands, as well as Proton, to Malaysian consumers. Proton's market share has shrunk considerably: it was just 14 per cent last year, down from 32 percent just over a decade ago and 64 percent during its peak in 1996.
The Leaf factor
In terms of customer recognition, there are two global BEV players that should benefit from significant presence in the region: Chevrolet and Nissan. The latter, which is popular among an average of 8 per cent of car buyers across the five Asean countries we surveyed this year, has expressed interest in producing and selling EVs in Southeast Asia - if government incentives are put in place.
Nissan last month unveiled its second-generation all-electric Leaf model in Japan to replace an existing model that is currently the world's bestselling BEV outside China. The new car comes with a 241-km range and will compete with other mass-market EVs such as Chevrolet's Bolt EV and Tesla's Model 3, and is likely to be the first of these models to be produced and sold in Southeast Asia.
Nissan's alliance with Mitsubishi and Renault should benefit its EV venture through purchasing and logistics as well as the pooling of technologies and platforms. Mitsubishi has a strong presence in Southeast Asia, and our survey showed it is one of the top 10 brands among Asean-5 consumers. The company recently opened a $565m manufacturing plant in Indonesia that can produce 160,000 units a year, 27 percent of its regional production capacity.
Above all, the race between Asean countries to attract investment in domestic EV production will be determined by how fast consumers adopt the new technology, which in turn depends on how quickly governments deploy infrastructure such as charging stations. Thailand and Malaysia are whirring into the lead.
This article was first published on October 5 by FT Confidential Research.
FT Confidential Research is an independent research service from the Financial Times, providing in-depth analysis of and statistical insight into China and Southeast Asia. A team of researchers in these key markets combine findings from proprietary surveys with on-the-ground research to provide predictive analysis for investors.
