BEV's market share in Malaysia stalled at just 1.3%, no further growth until fuel subsidy is removed

Between 2022 to April 2024, the number of fully electric, battery EV (BEV) models on sale in Malaysia have more than doubled, reaching over 40 different models.

Last year, eye-catching news headlines were made with silly three-digit percentage growth figures for BEV sales. Data from the Malaysian Automotive Association (MAA) showed that BEV sales grew by 286% year-on-year in 2023, totaling 10,159 units.

The low base effect was at play. When you were selling 5 units, a jump to 10 units is a 100% growth.

In 2022, the total number of BEV sales in Malaysia were 2,631 units, with just under 20 models on the market. In that same year, the government exempted BEVs from paying import and excise tax, as well as road tax.

This gave a huge boost to the segment, especially the typically heavily taxed luxury brands. The BMW iX became the most popular BEV in Malaysia, with 970 units sold.

With a starting price of RM 379,800 (xDrive40), the BMW iX was significantly cheaper than the BMW X5 45e plug-in hybrid (RM 480,800).

The BMW iX was also cheaper than a BMW 530i, which was priced at RM 402,800. For customers with a regular combustion engine Toyota Alphard as the family's primary car, choosing the iX over the 5 Series or X5 was a no-brainer.

By 2023, Chinese BEVs entered the mainstream, non-luxury segments. BYD became the No.1 selling BEV brand in Malaysia.

The BYD Atto 3 had a starting price of RM 150,430. It immediately became the country’s best-selling BEV, ending the year with over 2,200 units sold.

BYD’s momentum was increased further by the launch of the BYD Dolphin, which had a starting price of RM 100,530.

Both models boosted BYD’s market share of the BEV segment to over 70%.

At the same time, Audi Malaysia launched four e-Tron models (six if you count by variants), Mercedes-Benz Malaysia grew its EQ range from four to seven, and BMW Malaysia too grew its i Series went from three models to seven.

Today. the total number of BEV models in Malaysia has already crossed 40, if you include commercial fleet-only models like the CAM EC35 and Maxus eDeliver 3.

Yet, there is zero growth in BEV sales between 2023 and 2024 (year-to-date). Despite having so many more options, the market share of BEVs, as of April 2024, remains unchanged from last year, at 1.3%, according to figures compiled by MAA and RHB Investment Bank.

Although there are so many more BEV options this year, none has succeeded in increasing the available pool of customers from last year.

BEV models now face increased competition. There are more options, but the total number of shoppers remain the same.

Even market leader BYD has reduced the variants of its best-selling Atto 3 to just one Standard variant. Distributor Sime Darby Beyond Auto has so far resisted pressure to cut prices, even though Tesla has slashed RM 8,000 off the Model 3 and Model Y.

It appears that a circa 1.5% market share is the ceiling for BEVs in Malaysia.

Malaysia has a RM 100,000 floor price limit for imported BEVs. Local assembly (CKD) is one way to circumvent this. Until this floor limit is lifted, there will be no meaningful growth in BEV sales.

Currently, there are only two locally assembled BEVs – the Volvo XC40 Recharge and Mercedes-Benz EQS. Neta has already inked a contract manufacturing agreement with NexV Manufacturing, a joint venture between glove manufacturer Careplus and Neta’s distributor GoAuto. The first locally assembled Neta V is slated for launch by the end of this year.

Removal of fuel subsidies will also provide some much-needed push, but if subsidies for electricity are rolled back in tandem, the nett savings may not be attractive enough for mainstream customers.

Until the market share of BEVs exceeds 5%, charge point operators cannot hope to build a sustainable business providing electric vehicle charging services.

The 5% market share milestone is important because it is widely considered to be a turning point in making BEVs mainstream. Only then can public charging infrastructure start to progress at a reasonably fast pace.

Outlier markets like Norway aside, the market share for BEVs has a theoretical ceiling limit of around 30 percent.

This is based on China’s experience as the world’s biggest BEV market. Despite heavy subsidies from provincial governments / central government, very well-developed public charging facilities, and additional purchase barriers for regular combustion engine cars like a monthly capped on vehicle registration quota (only in major Chinese cities), the market share for BEV remains at just under 30%.

There are many reports out there quoting a 40% or 50% figure, but those are based on incorrectly interpreted data. Chinese authorities consider plug-in hybrids (PHEVs) and extended range electric vehicles (EREV) as electric vehicles too.

All plug-in charging-capable vehicles, including those with combustion engines, are grouped under the umbrella term New Energy Vehicles (NEV). Include those, and the figure will go up to 40%.