Malaysia’s automotive story has always been one of resilience and reinvention. From the early years of our national car programme to today’s rapidly evolving mobility landscape, each phase has challenged us to move beyond comfort zones and prepare for what comes next. As we approach Belanjawan 2026, the question before us is not whether we can keep up, but how we can lead. The mobility transition towards electrification, smarter vehicles and greener technologies is no longer a distant ambition. It is here, pressing at our doors, demanding bold and targeted action.

The urgency is clear. Malaysia’s Total Industry Volume (TIV) reached over 800,000 units in 2024 with local brands Perodua and Proton commanding a dominant 63% market share in the first half of 2025. Yet, despite this strong performance, electric vehicles represented less than 4% of total sales. In the first half of 2025 alone, 12,942 EVs were registered at 91.4% increase compared to the same period of a year earlier. The challenge is not one of interest as Malaysians are clearly ready to embrace electrification. The real barriers are affordability and ecosystem readiness, which continue to slow mass adoption. Meanwhile, the government shoulders an annual RM20 billion burdens in RON95 subsidies, while more than 9.5 million vehicles on our roads are over 15 years old and are outdated, inefficient and often unsafe. Left unaddressed, these dynamics will stall our mobility transition, weaken vendor competitiveness and place our national ambitions under the National Automotive Policy, the Low Carbon Mobility Blueprint and the National Energy Transition Roadmap at risk.

This is why the upcoming budget must act as a catalyst. For the average middle income family, the price of an EV still feels out of reach, even if the desire to make the switch is strong. The exemption of import and excise duties on CBU EVs will expire at the end of 2025, creating an urgent need for a new form of targeted incentive that reaches the end user directly. A carefully structured measure, tied to locally assembled vehicles with meaningful local content, could address both affordability and localization. Such initiative could put 8,000 new EVs on the road avoiding 20,000 tons of CO2 emissions annually and nearly 15 million liters of fuels consumptions saved each year. It would also ease the government’s RON95 subsidy burden by almost RM95 million over the lifespan of these vehicles, while securing jobs for Malaysian vendors through stronger participation in the EV supply chain.

But affordability alone is not enough. Between 2019 and 2024, Malaysia recorded more than 3.14 million road accidents with ageing vehicles being a notable factor. With more than 9.5 million cars on our roads over 15 years old, the need for a structured replacement programme has never been clearer. These vehicles are not only inefficient and polluting but also pose serious safety risks. A national scheme that incentivizes the retirement of old, unsafe cars in favour of cleaner and safer models would therefore deliver multiple benefits at once by reducing emissions, improving road safety and cutting the inefficiencies caused by outdated technology. Just as importantly, it would create the foundation for a more robust recycling ecosystem, where valuable materials are recovered, parts reused, and waste reduced in line with our circular economy goals. Authorized Automotive Treatment Facility (AATF) such as Car Medic, Jaring Metal and Kitaran Recovery Sdn Bhd are already proving that Malaysia has the capacity to manage end-of life vehicles responsibly. By scaling and formalizing their role within a national programme, we can accelerate the growth of a structured aftermarket ecosystem that supports dismantling, recycling and remanufacturing. Beyond environmental and safety gains, such a programme would also inject fresh demand into the automotive market, create new business opportunities and pave the way for an economy that is cleaner, safer and more future ready.

We must also remember that not every Malaysian drives a car. For gig workers, students and rural communities, motorcycles are a lifeline. In 2024, registrations of electric two-wheelers surged by 321%, proof that the appetite for change already exists. Supporting this segment would make the transition inclusive by helping delivery riders reduce running costs, improving urban air quality and creating new opportunities in local assembly and component production. This momentum was driven by targeted initiatives under MARiiCas, which have expanded the number of EV motorcycle models available from just 11 in 2024 to 28 by the first half of 2025. The growth of this segment has also involved nearly 6,000 workers, showing that the transition to electric mobility is not only an environmental necessity but also an economic enabler. Through these achievements, MARiiCas continues to meet its objectives in strengthening Malaysia’s EV ecosystem while supporting the nation’s broader sustainability goals.

And while affordability and inclusivity are essential, we cannot lose sight of where the future is headed. Tomorrow’s vehicles are powered not just by engines and batteries, but by semiconductors. It is the “brains” that make them efficient, connected and increasingly autonomous. Strategic investments in this space are critical, not only to reduce reliance on imports but also to ensure Malaysia positions itself as a serious player in the global mobility landscape. Local automotive electronics companies such as Betamek, Delloyd, MCE, Clarion and others are well-placed to seize these opportunities, competing alongside established semiconductor players and strengthening our value chain. But success will depend on deeper integration between the semiconductor and automotive sectors, working hand in hand to create technologies that are not only advanced but also commercially viable. For young engineers, this means opportunities to work on cutting edge innovations as for vendors it opens the door to climb higher up the value chain and become regional leaders in automotive electronics.

Belanjawan 2026 must therefore be seen not only as a fiscal exercise but as an investment in people the families who want affordable clean mobility, the workers who need safer commutes, the riders who depend on motorcycles to earn a living and the vendors and engineers who dream of competing on the global stage. Later this year, Malaysia will take centre stage as host of the Global Automotive & Technology Expo (GATE), where the world’s mobility leaders, innovators and investors will gather under one roof. This is more than an exhibition, it is a showcase of Malaysia’s ambition and readiness to lead in the global mobility transition. The policies announced in Belanjawan 2026 will not only shape our domestic market but will also be on full display at GATE as proof of Malaysia’s seriousness in driving electrification, localization and green technology adoption. For our vendors, it is a chance to demonstrate that Malaysian made components can meet world-class standards. For policymakers, it is an opportunity to attract foreign direct investment and forge technology partnerships that will accelerate our journey. And for Malaysia as a whole, it is the moment to tell the world that we are not just adopting mobility solutions, but we are shaping them, exporting them and setting benchmarks for the region. GATE is therefore not the conclusion of our mobility story but the launchpad where national ambition meets global opportunity.

The engines of change are already running. What Belanjawan 2026 must do is press the accelerator. With incentives that combine inclusivity, industrial depth and technological ambition, Malaysia can not only catch up to the mobility transition but also can lead it. The world will not wait and neither should we.