By Khoo Siew Fang

Malaysia, with its fairly young, well-educated and middle-income population of about 30 million, and good road transport network, has potential to grow its EV industry.

In a move that many saw as encouraging, the Malaysian government recently announced in the 12th Malaysia Plan (12MP) its plans to “become a carbon neutral country by 2050 at the earliest”. Aside from policies to promote carbon neutrality, there will also be focus on the development of the energy-efficient vehicles (EEV) production industry, to support environmentally friendly mobility initiatives.

Budget 2022 also saw additional incentives added to EVs: a road tax exemption of up to 100 per cent will be provided for EV vehicles, in addition to individual income tax relief of up to RM2,500 on the cost of purchase, installation, rent, hire purchase as well as subscription fees for EV charging facilities.

A Firm Foot on the Pedal - Now!

Malaysia certainly can’t afford to be left behind, as the future is rapidly going electric: Deloitte estimated in its global EV forecast that the industry will grow at a compound annual growth rate of 29 per cent over the next 10 years, with total EV sales growing from 2.5 million in 2020 to 11.2 million in 2025, then reaching 31.1 million by 2030. It also estimated that EVs would secure approximately 32 per cent of the total market share for new car sales in this period.

Yet, while it has much potential, Malaysia still has room to improve, and a clear strategy will be needed to develop the EV space.

On Acceleration Mode

Research has shown that the elements to make EVs truly take off are broadly similar. Across different markets, the elements of range, cost of ownership, charging infrastructure, value chain potential and regulatory environment are common themes.

Range anxiety has long been a concern for potential users of EVs. Currently, the average range of most modern EVs varies quite drastically – going from 200km to 400km per charge, depending on usage and traffic conditions as well. This is tied closely with the current lack of charging infrastructure at convenient points.

Cost of ownership also remains high in Malaysia. In the Deloitte study, only 0.4 per cent of surveyed said they would pay a premium for EVs, and just 10 per cent said they would pay more than a normal internal combustion engine (ICE) car. As most EVs now are priced higher than ICEs, tax incentives and other ‘perks’ could be introduced to lower the prices of EVs to encourage more to make the switch.

Popular local automotive website, paultan.org, estimated that even with tax and duties removed, the cheapest EV model available in Malaysia, the Nissan Leaf, would still cost around RM145,000 – about double the annual salary of a middle-income household.

Value chain potential, too, is a key enabler. The EV industry cannot operate in a silo; enabling a complete ecosystem to flourish is key. In this respect, for Malaysia to be more competitive, it could look to differentiate itself from its neighbours and focus on its unique role in the value chain. Malaysia can take advantage of its position as one of the leading electrical and electronics (E&E) manufacturers and take the lead in producing high-value E&E parts for EVs; in fact, Malaysia accounts for 13 per cent of the global back-end semiconductor output, while E&E accounts for 40 per cent of Malaysian exports (source).

The much-awaited policy on the electric vehicle (EV) industry, which is a part of the National Automotive Policy 2020, has not yet been announced, but with greater public sector involvement, the industry would find itself encouraged to lead the charge for EV adoption.

The Way Forward

There are several opportunities for Malaysia to pull ahead of its competitors. The first is to ensure clarity in policy, so private industry players can see where Malaysia is headed in the EV space and invest with confidence. Closer collaboration with local governments and private sector players could also lead to expansion of highway rest-points as charging points, or even battery swapping pit stops.

Malaysia can also take the lead by applying and adopting electrification of its public transportation system. In this way, the government can provide a show of confidence in EVs and work with city planners to electrify public transport and reduce carbon emissions.

From a wider perspective, however, we believe technology to be the answer to the electrification of vehicles overall. Hexagon’s EV solutions focus on optimising the efficiency of electric powertrains, modifying vehicle acoustics to avoid motor noise, and improving manufacturing and quality inspection to produce more efficient batteries and motors. (source)

This means we can engineer vehicles to be more efficient, and that we can use materials better by using composites or lightweight alloys, or make use of recycled materials. All these innovations increase efficiency and output, which in turn reduce costs of material and labour. These cost savings, ultimately, will be passed on to the consumer and reduces the cost of ownership.

After all, time and time again, technology advancement has resulted in savings for everything from consumer electronics to clothing. For example, technology has advanced so quickly that a laptop today is 96 per cent cheaper than it was in 1994 and is 1,000 times better in terms of capacity, processing power and, well, how well these devices fit into today’s vehicles!

Undoubtedly, smart manufacturing approaches were vital to bring these innovations to market within demanding deadlines while remaining competitively priced and profitable.

At Hexagon, we understand that we have the capability and responsibility to improve global human impact for business and society. We believe the race for a 100 per cent clean automotive should be accelerated and it can be by using our global perspective and end-to-end understanding of automotive development and manufacturing to set a higher bar for the industry.

Our goal is to help manufacturers rise to meet the e-mobility revolution, make the clean automotive market transition more effective, and reach the 100 per cent EV goal faster. We offer the industry an integrated approach to improve, speed up, and simplify the development of electric vehicles, hybrid transition technologies and clean automotive energy models.

So, as mobility evolves to meet the changing requirements of today’s customers, the ability to adapt and deliver relevant innovations quickly, sustainably and affordably in a secure fashion will be an important success factor – and Malaysia can and should be at the very forefront of this.

-- BERNAMA

Khoo Siew Fang is Country Manager of Hexagon Manufacturing Intelligence Malaysia.