This article first appeared in Digital Edge, The Edge Malaysia Weekly on July 24, 2023 - July 30, 2023

Malaysia has initiated ambitious plans to boost the national demand for electric vehicles (EVs), which include significant investments in charging infrastructure development, financial incentives for EV adoption and supportive policies. Riding high on this eco-friendly push, Volvo Cars Malaysia (VCM) is playing a pivotal role in aiding the government’s EV initiatives.

“In Malaysia, we are the first and only automotive maker to have a complete line-up of plug-in electric vehicles (PHEVs). It was the beginning of our electrification agenda, and this effort has managed to bridge the gap in transitioning local drivers to electric vehicles,” says a spokesman for VCM.

The luxury car maker has launched two fully electric vehicles since last year. This commitment to electrification has successfully bridged the gap for local drivers, as proved by the sale of nearly 73% of its XC40 Recharge Pure Electric and C40 Recharge Pure Electric, which are locally assembled (CKD) in Shah Alam, last year.

Building on this achievement, VCM is intensifying its efforts towards an all-electric future, recognising the potential of a diverse line-up of EVs that will offer consumers the choice to invest in an EV and the transformative experience of actually driving one.

The company has also chosen Malaysia as its EV hub for the Asean region, citing the strength of its local assembly plant as the main factor for this decision.

The 57-year-old VCM plant is the oldest automobile assembly plant in the country and is widely credited as one of the pioneers of the Malaysian automotive industry. This is further boosted by the wide availability of automotive talent and high-value jobs for locals to build EVs, which further enhances the growth of the country’s EV industry.

“With the current capabilities of assembling pure EVs, VCM has become the hub to export fully electric vehicles to markets in the region, to countries such as Indonesia, the Philippines and Vietnam,” says the spokesman.

“Our export initiatives do signal our intent to transform Malaysia into an EV hub. With the capabilities of our vehicle assembly plant and our electrification and sustainability commitments to continue and empower Malaysians to adopt a more sustainable lifestyle, we feel Malaysia is best suited to be Volvo Cars’ EV hub in Asean.”

Governmental support was key to shaping Volvo Cars’ vision. In addition to the existing measures, EVs were a vital part of the recent Budget 2023, with tax-friendly initiatives to further promote the industry and EVs as a whole.

These initiatives currently include full exemptions on import and excise duties for completely knocked-down (CKD) EVs until end-2027 — a move that significantly lowers the cost of EVs and makes them more affordable for consumers. In addition, the budget includes full import duty and excise duty exemption for completely built-up (CBU) EVs until end-2025. This measure aims to encourage the import of fully assembled EVs, further diversifying the options available to Malaysian consumers. Finally, there is a continuation of the Green Investment Tax Allowance (Gita), providing tax incentives and financial support for companies investing in the production and adoption of EVs.

“We are seeing an increase in demand for EVs in Malaysia. The EV market in Malaysia is expecting a 45.6% increase in sales this year, according to a November 2022 report by Fitch Solutions Country Risk and Industry Research. This is in line with Volvo Cars’ ambition to get a higher market share for EVs,” says the spokesman, adding that Volvo Cars received support from the Malaysian government when it announced its electrification agenda in 2022.

While EVs are certainly a big part of a low-carbon future, there is still plenty of work to do to achieve that vision.

“With the support from the Malaysian government, we are well on our way to spurring the EV industry, in line with the country’s 12th Malaysia Plan to accelerate the adoption of energy-efficient vehicles. Also, with many other manufacturers introducing EV models in Malaysia, we see it as an opportunity to further enhance public awareness and encourage more investments in infrastructure,” says the spokesman.

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