2026 EV Prices Imagined - Why EV Tax Exemptions Must Stay!

The Electric Vehicle (EV) tax exemption in Malaysia is set to end this year for Completely Built-Up (CBU) EVs, while the exemption for Completely Knocked Down (CKD) EVs will remain until 2027. If these exemptions are not extended, the cost of EVs will rise dramatically, potentially slowing adoption and undermining Malaysia’s long-term sustainability goals.

Should the exemptions lapse, all CBU EVs will be subject to an additional 30% Import Duty and an Excise Duty ranging between 10% to 30%, on top of the existing 10% Sales Tax. Based on current models available in Malaysia, this could lead to significant price hikes across the board.

A summarised table outlining the projected price increases highlights the potential burden on consumers. For assumption sake, Excise Duty is taken at just 10%. Based on this, the best selling EV - the BYD Atto 3 which currently is priced at RM123,800 will shoot up to roughly RM177,034 and the Tesla Model 3 RWD from RM181,000 to RM258,380.

Even the Proton e.MAS 7 Prime which is currently made in China will go up from RM109,800 to RM157,014 if CKD operations does not kick-off this year. 

Aptly, price hikes as such would make EVs less accessible to Malaysians, slowing down adoption and deterring potential buyers from making the switch to cleaner transportation.

Currently, automakers are hesitant to commit to CKD EV production in Malaysia due to the lack of a clear long-term policy beyond 2027. While some brands have expressed interest in local assembly, many remain cautious, particularly with the looming Other Market Value (OMV) increment, which has been deferred twice and is now set to take effect next year.

Without a firm policy direction, investments in local EV assembly and infrastructure development will stall, leaving Malaysia behind in the global EV transition.

If this happens, the impact on Malaysia’s EV charging network growth could be significant. Progress has already been slow, and the country remains far from achieving its goal of 10,000 EV chargers by the end of 2025. Charge Point Operators (CPOs) have already begun scaling back their rollout due to low demand.

If tax incentives are removed and EV prices surge, this rollout may come to a complete halt - especially since CPOs do not receive any government funding to support expansion effort. 

Malaysia has set ambitious targets for EV adoption. The government aims for 20% of new vehicle sales to be xEVs by 2030, increasing to 50% by 2040, and ultimately reaching 80% by 2050. These goals are at risk without continued incentives.

Removing tax exemptions too soon will slow EV adoption, making targets harder to reach. It will discourage automakers from local investment, delaying CKD production. It will also reduce affordability for consumers, limiting choices to a smaller segment of the population.

To ensure Malaysia remains on track for a greener future, policymakers must extend EV tax exemptions beyond their current deadlines. The public can play a role by engaging with policymakers to highlight the importance of affordability, supporting public petitions urging an extension of incentives, and raising awareness on social media about the potential impact of tax reinstatement.

Extending the tax exemptions would not only accelerate EV adoption but also provide the necessary stability for automakers to invest in local assembly, ensuring long-term growth for the industry. Malaysia must act now to secure its place in the global EV movement.