This article first appeared in The Edge Malaysia Weekly on January 26, 2026 - February 1, 2026

THE operating environment in the domestic auto industry continues to evolve as a fresh landscape develops in the electric vehicle (EV) segment.

Following the expiry of the excise duty exemption at end-2025, the import of completely built-up (CBU) EVs will be restricted to models priced at RM250,000 and above, with a minimum motor output of 200kW.

In other words, the government has imposed a ban on CBU EVs that are priced below RM250,000.

However, the import restriction on units priced at RM250,000 and above applies to new models that have yet to enter Malaysia. Marques such as BYD, XPeng and Jetour that are already in the market are also restricted to only importing models that will be sold at more than RM250,000.

Meanwhile, the implementation of the open market value (OMV) (P.U. (A) 402/2019) on completely knocked-down (CKD) units has been delayed to July 1.

Malaysian Automotive Association (MAA) president Mohd Shamsor Mohd Zain explained at a media briefing last week that the Ministry of Finance has granted a six-month extension for the implementation of the revised OMV calculation methodology across different original equipment manufacturers to ensure a level playing field.

He said there will be no immediate price increase for CKD cars in July despite public concern.

The duty exemption for EVs, in place since 2022, was intended for models priced at RM100,000 and above.

The import restriction is generally expected to stem the flood of EVs into the local market, particularly Chinese marques that have taken market share from combustion engine cars in recent years. EV adoption has been rising, however, and the government has set a target for EVs to make up 20% of vehicles sold by 2030.

Some believe the import restriction, to some extent, helps drive investment in Malaysia’s EV manufacturing sector, which in turn supports ecosystem development.

Already, Chery Automobile Co Ltd and BYD Company Ltd are setting up full-scale assembly plants in Malaysia. Chery has started production, while BYD is expected to begin in the middle of the year.

Nevertheless, this does not necessarily mean the auto market is less competitive; in fact, it is more crowded than ever before.

Bermaz Auto Bhd (KL:BAUTO) group CEO Datuk Seri Francis Lee Kok Chuan concurs that the policy is designed to push automakers to undertake local assembly of new models, stemming the influx of imported models that have been dominating the EV market over the last four years.

In view of the latest restriction, Bermaz will have to consider shelving its plan to bring in Mazda EV models to Malaysia.

“[We are] unlikely to bring in the Mazda 6e and EZ60 now with this new pricing. We were going to [import the models], but now we have to put on hold the plan for the time being,” Lee tells The Edge.

He says Bermaz will undertake CKD operations for some of the models, while continuing to import CBU units for others.

The Mazda 6e is a mid-size EV sedan that has an electric motor output of between 180kW and 190kW. Meanwhile, the EZ60, or better known as CX-6e in export markets, is a mid-size crossover with an electric motor output of 190kW.

Bermaz owns an 11.54% stake in EP Manufacturing Bhd (KL:EPMB). While the new policy may not affect Bermaz’s Xpeng distributorship, it could jeopardise its plan to introduce Mazda EV models in the future.

“The RM250,000 floor price is broadly positive for Malaysia’s automotive industry, particularly for CKD players that have invested heavily in local assembly and supply chains,” says an industry veteran, who sees the latest import restriction on EVs as helping to restore a more level playing field.

That said, he stresses that the impact of the earlier policy should not be understated.

“Intense competition from new foreign entrants — notably Chinese brands — has already reshaped the market. Companies such as Bermaz Auto have seen a drop in sales.

“While conditions may improve this year, it remains uncertain whether incumbents can fully recover their previous market share. The market today is far more crowded than it was just a few years ago, and in many ways, that structural shift has already taken place.

“The next priority for the government should be the broader ecosystem. Savings from petrol subsidy rationalisation could be channelled into accelerating EV charging infrastructure, which ultimately matters more for consumer adoption than pricing alone,” he adds.

The excise duty exemption between 2022 and 2025 that opened the doors wide for EV imports caused major disruptions to the local car market.

It gave Perusahaan Otomobil Kedua Sdn Bhd (Perodua) a big push to develop its own EVs in an effort to defend market share on its home turf.

The implementation of the OMV is seen by some players as a measure to help shield the national car makers from cut-throat competition.

For CKD assembly, it is understood the government is also looking at the level of localisation, and mandatory local sourcing is required in certain cases. This is to pave the way for developing an EV ecosystem and supply chain in Malaysia.

“The Ministry of Investment, Trade and Industry’s new import policy is designed to support Malaysia’s long-term automotive and electrification road map rather than to protect any single brand. The framework establishes clearer entry criteria for fully imported EVs, particularly from new market entrants, to ensure controlled market development, fair competition and alignment with national industrial objectives,” says Datuk Abdul Rashid Musa, deputy CEO of Proton Holdings Bhd.

He points out that the policy encourages local assembly, technology transfer and value creation within the country, while helping to strengthen the domestic EV ecosystem and maintaining an open and competitive market.

“As we already knew tax-exempt incentives would end in 2026 for CBU vehicles, we fast-tracked the construction of our NEV plant in Tanjong Malim, taking just 10 months to complete building works, and today, the facility is already churning out the CKD Proton e.MAS 7, our first locally assembled EV,” he tells The Edge.

Some industry players highlight that local content is essential to ensure national cars are competitive.

“The import restriction will ensure that no more cheap EVs flood the local market. If you look into the competitiveness of the local supply chain, we really can’t compete with the legacy supply chains from Europe, Japan and South Korea. And now China, which has the economies of scale in manufacturing.

“The government therefore needs to continue to protect the local automobile industry as a whole because of the social economic impacts,” says a senior executive.

Fewer Malaysians will be able to afford a CBU EV moving forward. However, the fierce competition is unlikely to abate as the new entrants are now assembling CKD EVs here. 

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