On February 21, 2020, Malaysia launched the National Automotive Policy 2020 (NAP 2020), which aims to propel the country to become a regional leader in automotive manufacturing. The policy is an enhancement of the previous policy, NAP 2014, with an addition of three new key objectives namely: Next Generation Vehicles (NxGV), Mobility as a Service (MaaS), and Industrial Revolution (IR 4.0) The government expects NAP 2020 to contribute 104 billion ringgit (US$24 billion) to the economy by 2030.
To achieve its objectives, NAP 2020 establishes seven new roadmaps and blueprints that serve as guidelines for the main policy. These comprise of strategies covering industry supply chains, human capital, infrastructure readiness, and engineering and technology development. The roadmaps and blueprints will be regularly reviewed to remain abreast of disruptive technologies and trends.
The specific objectives of NAP 2020 are as follows:
- Turn Malaysia into a regional hub for NxGV technology systems and vehicles production;
- Expand the domestic industry in the sector of MaaS particularly for the development of an integrated transport ecosystem;
- Ensure the advancement of the domestic automotive industry is in line with the developments of IR 4.0;
- Reduce carbon emission in-line with the ASEAN Fuel Economy Roadmap of 5.3 Lge/100km by 2025; and
- Ensure the country benefits from the spin-off economy from the overall implementation of NxGV.
NxGV
NxGV’s are classified as energy-efficient vehicles (EEV) that are equipped with a minimum of Level 3 vehicle automation. NxGV technology is classified according to five levels, which goes from driver-enabled vehicles to fully driverless.
Level 3 is conditional automation, which means the vehicles are capable of driving themselves but only under strict and ideal conditions, and a human driver is still required to be behind the wheel. If these conditions are not met, the human driver must take over. The government is aiming for market penetration of NxGVs by 2025.
MaaS
MaaS is a concept that integrates various types of services and transport modes into one centralized service through a digital platform. This includes ride-sharing apps, as well as delivery services and online healthcare services.
Through MaaS, the government hopes this industry will impact new ownership models and form a critical part of the future of transportation in the country.
IR 4.0
IR 4.0 refers to developing and applying technologies in the field of artificial intelligence (AI), big data analysis, and internet of things (IoT) to enable the implementation of the NxGV and Maas industries.
Through this scheme, Malaysia’s automotive industry will develop vehicle-to-vehicle communications technology, cameras, and new sensors that are equipped with advanced algorithms to monitor the road, vehicle, and weather conditions.
The NAP 2014 framework consisted of:
Three directional thrusts:
- Investments;
- Technology and engineering; and
- Market expansion.
And three strategies:
- Human capital development;
- Value chain development; and
- Safety, environment, and consumerism.
- Customized incentives
The government will prepare customised incentives in a prevailing regulation to encourage investments into NAP 2020. There are, however, several vast criteria, investors will have to adhere to:
- Value of investment;
- Total production;
- Research and development activities;
- Critical component manufacturing;
- Fuel consumption;
- Vehicle carbon emissions;
- Value-added activities;
- Employment opportunities;
- Engineering index;
- Total exports;
- Supply chain development; or
- Technology transfer.
The government will also support market expansion through export promotion programs, soft loan schemes, free trade agreements (FTA), and e-commerce platforms, among others. Additionally, the government will issue specific NxGV manufacturing licenses.
Having said that, yesterday (June 23), Investment, Trade and Industry (MITI) Minister Tengku Datuk Seri Zafrul Abdul Aziz Malaysia’s newly implemented National EV Steering Committee (NEVSC) is aimed to speed up the energy-efficient vehicle (EEV) ecosystem enablement to keep the country competitive with other regional peers, said.
He said the future of Malaysia’s electric mobility and its benefits for consumers and the environment lies in collaborative partnerships across industries in an empowered ecosystem.
“The Cabinet has considered and agreed to improve the governance structure of the National EV Task Force (NEVTF) by establishing the NEVSC.
“We want to coordinate the understanding and direction of all stakeholders so that we can form a synergy of solid cooperation in making the national electric vehicle initiative a success based on the whole of government approach,” he told reporters after the memorandum of understanding signing ceremony between Green EV Charge Sdn Bhd and PLUS Malaysia Bhd in Kuala Lumpur.
Tengku Zafrul said the steering committee is led by MITI and represented by various ministries, government agencies and relevant industry parties.
He said the NEVSC will also be made up of members from the Ministry of Finance, the Ministry of Science, Technology and Innovation (MOSTI), the Ministry of Transport, the Ministry of Works, the Ministry of Local Government Development (KPKT), and the Ministry of Natural Resources, Environment and Climate Change.
“I look forward to working with all the ministers and also their officials at the highest management level. The main purpose is for us to resolve the issues pertaining to the implementation of the EEV ecosystem as soon as possible.
“So far, we have approximately 1,000 electric vehicle charging stations and our target is to create at least 10,000 charging stations by 2025,” Tengku Zafrul said.
Earlier in his speech, the Minister said positioning Malaysia as a pro-industry, pro-investment and pro-trade country, while also ensuring that small and medium enterprises and Malaysians’ interests are constantly safeguarded to nurture a more inclusive and broad-based economic growth, remained important for MITI.
“For as long as I am MITI Minister, you will have my assurance that the ministry will do its utmost to provide the appropriate policies and regulatory framework to achieve our national objectives,” he said.
Challenges Towards EEV acceleration
Fierce competition from ASEAN member states
Malaysia faces fierce competition from other ASEAN member states in its mission to become a leader in automotive manufacturing and engineering.
In the past, Malaysia produced some 604,000 units in 2019 with the majority sold in the domestic market. This is still dwarfed by the region’s leading car exporters in Thailand and Indonesia who export more than 1 million and 350,000 vehicles, respectively.
NAP 2020 does bring promise as it aims to develop an automotive ecosystem that is in tandem with the new technological frontiers currently at the forefront of mobility in ASEAN, thus, providing a unique opportunity for investors looking to grow their footprint in this region.
Insufficient Charging Stations, Other Related Infrastructure
The lack of charging stations for large vehicles and other related infrastructures remain a significant hurdle to the widespread adoption of EVs, particularly in rural areas. Experts say EV infrastructure is isufficient to cater to the growing demand for EVs.
To address this issue, the government has taken several initiatives to promote the development of EV infrastructure in the country. This includes offering tax incentives for companies that invest in EV charging stations and has set a target to install 125,000 charging stations nationwide by 2030.
In addition to infrastructure, the cost of EVs and the limited awareness of the benefits of EVs among Malaysians are other challenges that need to be addressed. There is a need to educate businesses on the benefits of EVs, such as lower operating costs and environmental benefits.
The main issue is to make EVs more affordable and accessible to everyone.
Nevertheless, despite the challenges, Malaysia is making progress in the adoption of commercial EVs.
“As of January 2023, Malaysia has approximately 900 charging points, catering to around 10,000 registered EVs,” he said, adding that Malaysia is expected to provide up to 4,000 EV charging points this year,” said Technology consulting company Arthur D Little Singapore engagement manager Akshay Prasad on Malaysia’s readiness and plans for EV charging infrastructure.
However, he noted that the majority of these charging points are alternating current (AC) chargers, which have limited charging speed. This poses a challenge for commercial EVs that travel long distances, even interstate, on tight schedules.
Of the 4,000 target charging points, Akshay said around 10% will be dedicated to direct current charging, which is faster with a power of at least 50 kilowatts, while the remaining 90% will be AC chargers.
“These plans are part of Malaysia’s effort to transition towards cleaner and greener transportation options,” he said.
However, Akshay also highlighted that the country has a long way to go in terms of providing sufficient charging infrastructure to support the growing EV market.
Potential Solutions to EV Woes
In addition to traditional charging stations, battery swapping is another potential solution. Battery swapping involves recharging the EV by providing the EV owner with a new battery each time they visit a battery swapping station.
This method has its advantages and disadvantages, but one significant advantage is that it can bring down the cost of purchasing an EV since the battery is removed from the purchase cost.
Malaysia’s low cost of electricity also makes it attractive for battery-swapping station operators to consider this opportunity.
However, purchasing EVs can be expensive and may not be accessible for fleet operators, despite the government’s efforts to promote EV adoption in Malaysia.
One potential solution is to consider EV conversion services, which convert an existing internal combustion engine (ICE) vehicle into an EV by removing the powertrain and replacing it with a battery, motor, controller and battery management system.
Such EV conversion services can provide a “converted EV” for half the price of a new EV purchase.
“EV conversion services are still not allowed in Malaysia, but policymakers and thought leaders are open to having an open discussion on the matter and possibly implementing it in the future.
“In countries like the US, France and India, EV conversion services are already being used. In SouthEast Asia, Indonesia has allowed it for two-wheelers and also offers incentives,” Akshay said.
