Malaysia’s ambitious push toward electric vehicles (EVs) may be facing an unexpected hurdle: the government’s own petrol subsidy reforms.
According to a recent sector report by Kenanga Research, the new targeted RON95 subsidy mechanism—which recently lowered the pump price to RM1.99 per litre for eligible Malaysians—could inadvertently diminish the financial incentive for middle- and lower-income groups to switch from traditional internal combustion engine (ICE) vehicles to Battery Electric Vehicles (BEVs).
The government’s decision to maintain a heavily subsidised fuel price for the majority of the population (capped at 300 liters per month via MyKad verification) effectively lowers the “total cost of ownership” for petrol cars.
“This new petrol subsidy mechanism could make the transition even slower than earlier expected,” it will take at least 5 years or more for EV adoption to pick up and petrol cars to peak Kenanga noted. “The middle- and lower-income groups now have less incentive to switch from ICE to EV for the time being.”
While EV adoption has seen exponential growth—leaping from just 274 units in 2021 to 44,800 units in 2025 (representing 5.5% of total sales)—analysts believe the momentum could plateau as long as petrol remains affordable for the masses.
Infrastructure Challenges Linger
Beyond the cost of fuel, “range anxiety” continues to haunt potential buyers. The government’s target of 10,000 public charging points remains a work in progress.
As of February 2026, there are 5,624 units installed nationwide—roughly 56% of the original goal. While the rollout of DC Fast Chargers has actually exceeded targets (reaching 1,923 units), the slower AC Chargers are lagging at only 40% of their 8,500-unit goal.
Looking at EV adoption milestones in 2021: 274 units 2023: 13,301 units 2025 reached 44,800 units (5.5% of TIV). Future target for 2030 20% of new vehicle sales and 2050 Vision: 80% (including Hybrids)
National Marques Lead the Charge
Despite the potential slowdown in mass adoption, the “EV war” between national carmakers is intensifying. The Proton e.MAS 5 has already emerged as a best-seller, amassing over 10,000 bookings and helping Proton secure a dominant 33% market share in January 2026.
Perodua is also preparing for a 2026 launch of its highly anticipated all-new Myvi (DNGA), which is expected to feature a hybrid or full-electric variant, aiming to hit a 60% localization rate by mid-year to keep prices competitive.
Kenanga maintains a NEUTRAL stance on the automotive sector for 2026. While the macroeconomic backdrop is supportive and the Overnight Policy Rate (OPR) is stable, the combination of intense price competition and the “subsidy effect” suggests that gasoline vehicles will likely remain the dominant choice for at least the next five years.
Kenanga’s top sector picks are MBM Resources as a strong proxy for the affordable Perodua brand and Sime Darby which is currently benefiting from higher-margin industrial segments and UMW integration.
