Budget 2027 could provide greater clarity on Malaysia’s electric vehicle (EV) incentive framework and a proposed levy on EV sales to finance public charging infrastructure, as competition intensifies and demand for electrified vehicles continues to grow, according to CIMB Securities.
In its latest automotive sector report, the research house said the Oct 9 budget announcement could indicate how the government intends to structure EV incentives beyond 2027, when existing tax exemptions for locally assembled completely knocked-down (CKD) EVs are scheduled to expire.
CIMB expects future incentives to become more targeted, with greater emphasis on technology transfer, local component sourcing and deeper participation by Malaysian companies in the EV supply chain.
The government has retained tax exemptions for CKD EVs until Dec 31, 2027, while incentives for imported completely built-up EVs were not extended.
Proposed EV Levy Could Affect Ownership Costs
CIMB also expects Budget 2027 to shed light on the proposed levy on EV sales, which could be used to finance the expansion of Malaysia’s public charging network.
Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani said in August that the government was studying a mechanism to collect contributions from EV sales for a dedicated charging infrastructure fund.
However, the government has yet to decide whether to implement the levy or determine its amount, scope and implementation timeline.
CIMB said the proposed levy could increase EV ownership costs and potentially affect demand, although it is too early to assess the impact without further policy details.
The research house expects the government’s EV policy direction to remain important for automakers planning local assembly, component manufacturing and charging infrastructure investments.
Chinese Automakers Gain Market Share
Malaysia’s automotive market is also undergoing a shift in competitive dynamics, with Chinese manufacturers expanding their presence.
According to CIMB’s analysis, Chinese original equipment manufacturers recorded a 28% year-on-year increase in sales during the first eight months of 2026, raising their market share to 7.7% from 6.1% a year earlier.
Growth is broadening beyond established players such as BYD to newer entrants, including Jetour, Zeekr and iCaur.
In contrast, CIMB estimated that Japanese automakers’ market share declined by 4.2 percentage points to 21.7%.
Proton recorded a 38.5% increase in sales during the eight-month period, supported by demand for the Saga and its electrified vehicle models, while Perodua’s sales declined 5.2%.
SUV demand remained resilient, with segment sales rising 18.8% year-on-year, supported by new model launches and stronger demand for vehicles such as the refreshed Proton X50 and e.MAS 7.
Vehicle Sales Forecast Maintained At 800,000 Units
CIMB maintained its full-year 2026 total industry volume forecast at 800,000 units, supported by new vehicle launches, aggressive promotional campaigns and rising demand for electrified vehicles.
Malaysia recorded 71,428 vehicle sales in August, down approximately 3% from July, according to the Malaysian Automotive Association (MAA).
Despite the monthly decline, SUV sales reached nearly 24,000 units, the highest monthly volume this year, while pick-up truck deliveries approached 3,000 units.
CIMB expects the restoration of the 300-litre monthly petrol subsidy quota, broader diesel subsidy coverage and supportive hire-purchase financing conditions to sustain vehicle demand.
The research house maintained its Neutral stance on the automotive sector, citing intensifying competition and a relatively modest growth outlook despite continued demand for SUVs and electrified vehicles.
