As Tesla gets the green light in Malaysia, is the country ready for it?
- It was announced last week that Tesla had been approved to import battery electric vehicles into Malaysia.
- The Ministry of International Trade and Industry said the EV giant plans to introduce its “experience centers,” service centers, and its “Supercharger” network in Malaysia.
- To date, autopilot cars remain a novelty among Malaysian drivers due to their relatively recent introduction onto Malaysian roads.
Last week, the International Trade & Industry Ministry (MITI) in Malaysia announced that Tesla was given the green light to establish its presence in the country. The American electric vehicle giant is the first applicant of the Malaysia battery electric vehicle (BEV) Global Leaders program, and the approval means Tesla will soon be setting up sales, service, and charging networks in the Southeast Asian nation.
The news was widely welcomed locally, considering how the government has been working to have a significantly higher and more meaningful uptake in the country’s EV adoption. In fact, MITI facilitated the entry of Tesla through the BEV Global Leaders initiative, which aims to help boost demand in the local market and further promote the development of the entire ecosystem to support EV adoption.
In announcing the development, MITI’s Minister Zafrul Aziz said that Malaysia would strategically leverage its established electrical and electronics ecosystem to make the country the preferred investment destination for technology related to electric mobility. “Tesla will establish a Head Office, Tesla Experience & Service Centers, and Supercharger network, simultaneously creating skilled & better-paying jobs for Malaysians,” Zafrul said in a tweet on March 1.
Tesla will establish a Head Office, Tesla Experience & Service Centres, and Supercharger network, simultaneously creating skilled & better paying jobs for M'sians. pic.twitter.com/BbQP7jNazX
— Tengku Zafrul 🇲🇾 (@tzafrul_aziz) March 1, 2023
The news also triggered buying momentum in local EV-related stocks, signaling the market’s excitement about having such a big EV brand in Malaysia. To recall, in May 2022, Tesla indicated that it was open to establishing a Supercharger DC charger network in Malaysia, which would be helpful for official Tesla customers in Thailand and Singapore.
Tesla had also established Tesla Thailand (for distribution) as part of its expansion in ASEAN, with the first supercharger station launched last week. As for Singapore, superchargers have been available, with the first V3 units – with CCS connectors – installed in 2022, according to local automotive news portal Paul Tan.
While the official entry of Tesla into Malaysia is confirmed, the timeline and which Tesla cars will first land in the country remain to be determined. However, based on previous trends, the brand’s most affordable models – Model 3 and Model Y – may make their entry first. Even in Thailand, those two EV models were the first to hit the local market late last year and are offered in multiple versions.
Why is the entry to Malaysia a timely move for Tesla?
Tesla has steadily expanded its global footprint since it started selling BEVs years ago. Apart from its first and primary market, North America, the company expanded into much of Europe. In the last ten years alone, Tesla has set up more than 4,500 sites worldwide, with an average of nine Superchargers at each location.
The majority are in North America, and for Asia, most are in China. In the last couple of years, the EV giant started looking into the Asia-Pacific region before it began official sales in Singapore in mid-2021 and started up in Thailand this year. Meanwhile, in Malaysia, there have been limited numbers of Teslas that private importers have sold.
However, the absence of an official presence has meant that after-sales support – a vital part of ownership – is not readily available. Although Malaysia has had a subsidiary in Penang handling back-office operations, including finance, since 2017, it has not made any retail sales. That said, having agreed to set a presence in Malaysia, Tesla will be able to fill the gap between Singapore and Thailand with Superchargers.
That, in turn, would allow Tesla owners to drive from the southern tip of Peninsular Malaysia to Bangkok with assured recharging from Superchargers. Coincidentally, Porsche Asia Pacific has also almost completed its three-country network of charging stations. On top of that, Malaysia has recently extended its import duty and excise duty exemption for fully-imported (CBU) EVs for yet another year until December 31, 2025.
The Malaysian government is also providing manufacturers of EV charging equipment with 100% income tax exemption from the year of assessment 2023 to 2032. Those manufacturers will also be offered a 100% investment tax allowance for five years.
Affordability remains a hurdle
Yet, of all the challenges in the vehicle electrification process for Malaysia, the question would be: does the industry have the right affordable EVs for mass adoption? No doubt, a full tax exemption on EVs is a great way to spur demand, but the supply of affordable EVs is still an issue. Considering how EVs are generally expensive to produce in the first place and global shortages are making it impractical for companies to sell cheaper products in the market.
Take Tesla, for instance. Even if its most affordable range makes it into Malaysia, it could cost between RM250,000 to RM330,000–a far cry from what the Malaysian middle-class population would deem affordable. While Tesla has recently started sharing intentions to cut assembly costs by half in future generations of cars, chief executive officer Elon Musk has yet to unveil when the company would debut a much-awaited affordable electric vehicle.
For Malaysia, the hype of having the EV giant in Malaysia may be short-lived, considering it will only be addressing a niche market rather than the mass. Until then, the country would need more EV players to make their foray into the country to create a more competitive market and provide users with more affordable options.
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