Malaysia's Prominence in South East Asia's EV Hub

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Malaysia's Prominence in South East Asia's EV Hub

Malaysia is on its way to becoming a major electric vehicle (EV) hub in Southeast Asia, thanks to the government's aggressive support in creating a conducive environment for EVs and the strong commitment of two world-renowned automakers, Geely and Tesla.

As reported by Bernama, Mohd Shamsor Mohd Zain, President of the Malaysian Automobile Association (MAA), stressed that the presence of the two automakers showed the importance of Malaysia's role in the regional automotive industry. He added that the global experience and advanced technology of these two companies can bring new ideas and business methods that can then be applied locally, including research and development of high-tech-based products that may not yet be available in the country.

Mohd Shamsor also noted that with the focus on electrification, the automotive industry will see changes in vehicle components, especially in the production of batteries and other specialized components for electric vehicles. In addition, he believes that the industry will adopt new skills and infrastructure to adapt to different levels of electrification, ranging from mild hybrids to fully electric vehicles. This will also create opportunities to retrain or upskill the automotive workforce, while encouraging innovation, research and manufacturing of high-value components.

As Malaysia is a major electrical and electronics manufacturing hub in the region, automakers and automotive investors can leverage this facility to ramp up production of Next Generation Vehicles (NxGVs). With the right support from the government in terms of infrastructure and policies, Mohd Shamsor believes that Malaysia has the strategic position and favorable economic conditions to become a regional hub to support the global growth of electric vehicles.

With more than 40 car brands in the domestic market today, the presence of new companies in the automotive industry will definitely give a positive boost to the market and attract the interest of more customers. In addition, competition is intensifying and the variety of car choices will increase, pushing all automotive companies to remain innovative and provide better products and services to consumers.

The arrival of more electric cars, including locally assembled (CKD) models, will create new economic opportunities for suppliers. Currently, electric cars are still considered a niche market in the domestic automotive industry, so it is important to ensure strong demand to ensure that the sector develops well in Malaysia.

To reach this tipping point in the industry's development, significant changes in the labor, tax and subsidy distribution structures are required for Malaysia to capitalize on its competitive advantage by global standards. Several countries at the forefront of the electric vehicle industry are implementing carbon taxes to encourage manufacturers and consumers to switch to greener vehicles.

In a bid to become Malaysia's next-generation automotive hub and comprehensively cover the automotive and mobility solutions value chain, Geely is working with its Malaysian partner DRB-Hicom Bhd to establish the Automotive High-Tech Valley (AHTV) in Tanjung Malim, Perak. The project is expected to attract a total investment of RM32 billion from various parties.

More recently, on July 18, Prime Minister Anwar Ibrahim announced that Geely plans to invest US$10 billion (RM45 billion) to develop Tanjung Malim into the region's largest automotive city.

The development of AHTV is expected to create employment opportunities, including various types of highly skilled jobs. To support this initiative, the government is offering an attractive package of incentives, including tax breaks for land development, production of parts and components, and construction of research centers and training facilities.

According to the Annual Report on the Global Transition to Electric Vehicles: 2022," published by the International Council on Clean Transportation, the Association of Southeast Asian Nations (ASEAN) single market recorded sales of 39,000 electric vehicles last year, a 165 percent increase from the previous year. Research from Counterpoint's Global Passenger Electric Vehicle Model Sales Tracker shows that Thailand is the largest contributor with 58 percent of electric passenger vehicle sales in Southeast Asia, followed by Indonesia (19.5 percent), Vietnam (15.8 percent) and Malaysia (2.6 percent).

To achieve its goal of electric vehicle adoption, Malaysia has set a target of 15 percent of total industry volume (TIV) coming from electric vehicles - both EVs and hybrids - by 2030, rising to 38 percent of TIV by 2040.

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