Thursday 22 Feb 2024
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KUALA LUMPUR (Aug 28): Malaysia’s fuel subsidy policy is contradictory to its promotion for the adoption of electric vehicles (EVs) and hampers the country's overall push for more EV use, according to Gentari deputy CEO and chief green mobility officer Shah Yang Razalli. 

“When we look at the fundamental driver of EV adoption, we can’t help but talk about total cost of ownership parity or TCO parity. In simple terms, is it cheaper to buy and operate an EV throughout its lifetime compared to an equivalent ICE (internal combustion engine) vehicle?” he said during a breakout session at the Energy Transition Conference on Monday (Aug 28).

What cuts down on EV-to-ICE cost parity are financial incentives ― in the form of outright purchase subsidies as well as additional incentives such as free public charging, parking or tolls ― while also disincentivising the use of hydrocarbon-based fuels in the way of fuel taxes or carbon taxes.

“The parity that we see [in Norway] is [EVs are] about 30% [cheaper than ICE equivalents]. For countries with good sustainable EV adoption, we see about 20% to 30% [parity in favour of EVs] to be the right amount,” he noted.

Touching on Malaysia’s situation, Shah said the import tax and excise duty exemption on completely buildup-up (CBU) EVs instituted by the government are a good start, but noted that its ongoing fuel subsidy is contradictory to its EV push ― resulting in EVs being 20% more expensive to own and operate than ICE equivalents in Malaysia.

Looking at regional examples of countries that attained price parity, Shah said beyond tax exemptions, these countries also offered subsidies in terms of reducing the outright purchase price of EVs, as well as disincentivising the use of fuel for ICE vehicles.

“Note that none of these countries, like India and Thailand, had fuel subsidies to begin with. But they have instituted some sort of duty or tax or in some cases carbon tax on the use of fuel for ICE [vehicles],” he added.

Nonetheless, Shah opined that Malaysia is on the right track in terms of facilitating the adoption of EVs, and noted that the industry and consumers are anticipating the unveiling by Prime Minister Datuk Seri Anwar Ibrahim of Part 2 of the National Energy Transition Roadmap on Tuesday (Aug 29), which Shah believes should further supercharge EV adoption.

Edited ByTan Choe Choe
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