Malaysia’s push to tighten regulations on completely built-up (CBU) electric vehicle (EV) imports could unintentionally slow EV adoption by reducing consumer choice and pushing up prices, according to industry stakeholders.
The Investment, Trade and Industry Ministry’s (MITI) upcoming policy changes on EV CBU guidelines, set to take effect from July 1, have raised concerns that the local market may become less competitive just as demand momentum was building.
Malaysian EV Owners Club president Datuk Shahrol Azral Ibrahim Halmi said the move is likely to have a direct impact on affordability, particularly in the sub-RM300,000 segment where most early mass-market EV adoption has taken place.
“This will limit consumer choice, especially for EVs priced under RM300,000. There will be less competition and consumers might end up having to pay more,” he told BusinessToday.
He warned that the policy could dampen demand at a critical stage of Malaysia’s EV transition, which had been gaining traction amid global energy price volatility and growing environmental awareness.
On May 6, MITI announced that beginning July 1, all EV CBU imported into Malaysia must meet a minimum Cost, Insurance and Freight value of RM200,000 as well as minimum motor power requirement of at least 180kW.
Balancing Localisation Goals With Market Access Pressures
According to a well-known automotive industry portal, the latest EV CBU policy framework appears to be increasingly aligned with efforts to strengthen and protect national automotive players, particularly Proton Holdings Bhd.
The report suggests that the regulatory direction is not only aimed at managing EV imports but also at reinforcing the long-term competitiveness of domestic automotive brands as Malaysia transitions into the electric mobility era.
Against this backdrop, Shahrol Azral said the core challenge lies in striking a balance between localisation ambitions and the need to maintain an attractive, competitive market for global EV players.
“Essentially, the policy is about trading market access with localisation, jobs and value creation,” he said.
He added that manufacturers must weigh Malaysia’s sales potential against the additional costs of local assembly, particularly when competing against highly efficient global production hubs.
“So far, the extra cost has been borne by consumers through higher car prices,” he noted.
He warned that if global EV makers fail to see a viable path to profitability under the new framework, some could reconsider their presence in the Malaysian market.
“If they don’t see a profitable way to both localise and sell enough of their products, it would make sense for them to withdraw from our market,” he said.
Echoing this sentiment, MCA Economic and SMEs Affairs Committee chairman Datuk Ir Lawrence Low said the government must strike a careful balance between protecting local automotive players and preserving market competition as Malaysia accelerates its EV transition.
“While supporting efforts to strengthen the domestic automotive ecosystem, tightening entry requirements for EV CBU too early could reduce affordable options for consumers and slow EV adoption among mainstream Malaysians,” he said.
Low then stressed that Malaysia should focus on becoming a regional EV manufacturing and export hub through localisation, technology transfer and talent development, while ensuring local players continue improving competitiveness rather than relying indefinitely on protectionist measures.
Pressure On New EV Entrants, Investment Timing
Meanwhile, Shahrol Azral highlighted that the policy is also expected to hit newer EV entrants, particularly Chinese and emerging brands, that had been planning to enter Malaysia through the CBU route before transitioning to local assembly.
“Such firms rely heavily on scale, regulatory certainty and gradual market entry strategies.
“It will be tough for new EV entrants to justify setting up local assembly operations if the potential sales volumes aren’t there. These investments are big and take time to materialise,” he said, while emphasising that sudden regulatory changes could undermine investor confidence and disrupt long-term planning in the EV ecosystem.
Beyond pricing and investment risks, both Shahrol Azral and Low have raised concerns over whether the policy maintains a level playing field across all EV players.
“Transparency would be key to addressing market concerns over fairness and policy direction, and transparency will go a long way to assuage fears about not having a level playing field,” he said, suggesting that government disclosure of Automotive Business Development Committee decisions could improve market confidence.
Overall, Malaysia’s EV market has been gaining traction in recent years, supported by tax incentives, rising model availability and growing consumer awareness. However, industry players now caution that policy shifts at this stage could alter the trajectory.
With affordability and choice seen as key drivers of adoption, stakeholders warn that higher entry barriers and reduced competition could slow the pace of EV uptake just as the market begins to scale.
