Malaysia's electric vehicle (EV) policy, set by the Ministry of Investment, Trade and Industry (MITI), is designed not only to protect national carmakers Proton and Perodua, but also to support the development of the local automotive industry.

The policy aims to encourage EV manufacturers to establish operations in Malaysia and increase collaboration with local suppliers, according to Deputy MITI Minister Sim Tze Tzin.

"We want foreign manufacturers to collaborate with our local vendors in the ecosystem so that they can enhance their capabilities, move up the value chain and position Malaysia to become an exporter of automotive components and parts, while also preparing for the future of autonomous driving," he told reporters on the sidelines of the 2nd ASEAN Automotive and Mobility Conference this week, according to media reports.

In his opening speech at the event, Sim said the government's focus is on building an ecosystem encompassing manufacturing, supply chains, infrastructure, talent and innovation. He stated that Malaysia's automotive sector contributed an estimated MYR 80 billion to MYR 95 billion (US$ 20.3 billion-24.1 billion) to the country's GDP in 2025 and employed more than 750,000 people.

The Bayan Baru MP added that Perodua works with approximately 190 vendors, while Proton has a network of 116 vendors. Together, the OEMs spend nearly MYR 15 billion on local parts. Malaysia currently has more than 640 automotive parts manufacturers, including between 150 and 180 Tier 1 suppliers serving both local and foreign carmakers.

The issue has gained attention following MITI's new regulations for fully imported CBU EVs, which raise the entry requirements in two areas: a declared CIF value (cost, insurance and freight) of no less than MYR 200,000 and a minimum power output of 180 kW (245 PS), effective July 1st. CIF refers to the value before taxes and margins, and retail prices for CBU EVs are expected to reach at least MYR 300,000 under the most favourable scenario.

In addition, imported EVs must meet the 180 kW output requirement. Combined, these two conditions are expected to exclude a number of mid-range CBU EVs, leaving only CKD models and premium CBU options. Existing stock and vehicles already in transit are exempt from the new regulations.

Sim rejected concerns that the effective minimum pricing threshold for imported EVs would restrict access to lower-priced models. "If they want to price EVs between MYR 100,000 and MYR 200,000, they can work together with contract manufacturers to manufacture here," he said. In conjunction with MITI's regulations for new factories, questions have emerged over whether the government prefers OEMs to partner with local contract assembly operators instead of establishing independent manufacturing facilities.

BYD is expected to be among the companies most affected, as its entire Malaysian product range is currently imported from China. Several carmakers have already begun CKD operations, while others have announced plans for local assembly or are preparing to commence production.

BYD also has CKD plans, but these were affected by MITI's recently announced regulations for automotive factories. In a March 31st statement, MITI Minister Johari Abdul Ghani stated that BYD, along with all new EV plants established after September 2025, would be required to comply with a minimum vehicle price of MYR 100,000, an output allocation of 80% exports and 20% domestic sales, and the inclusion of a paint shop within the facility.

Failure to comply with any of these new requirements would result in the manufacturer not being granted a manufacturing licence for CKD operations. The 80% export requirement is considered a major challenge for BYD, particularly as the company already operates CKD plants in both Thailand and Indonesia, in addition to its manufacturing capacity in China.

MITI's March 31st statement said that the conditions are non-discriminatory, apply regardless of brand or country of origin, and cover all new automotive investments in Malaysia beginning September 2025, "except those using existing local assembly facilities". Existing CKD operations are therefore permitted to continue operating without a local paint shop, including facilities used by Proton eMas and EPMB.

Sim's suggestion regarding contract manufacturing reflects an approach already adopted by several Chinese brands. Most recently, MG Motor began production of the MG S5 EV at EPMB's Melaka plant, which also assembles vehicles for GWM, BAIC and Xpeng. The Inokom plant in Kulim, Kedah, owned by BYD's local partner Sime Motors, currently assembles EVs for Chery and BMW.

Questions remain over whether the facility has sufficient capacity to support BYD production, or whether BYD and Sime Motors could jointly develop a new plant while operating under the local partner's manufacturing licence. Such an arrangement could provide a potential solution to the current regulatory issues. BYD has also reportedly secured land in Tanjong Malim for future operations.

The following EV contract assembly partnerships have either been established or are linked to existing ICE manufacturing relationships:

- BAIC / Arcfox - previously signed with EPMB
- BMW / MINI - Inokom
- Changan Automobile - reportedly linked with Berjaya Assembly, formerly the Oriental plant in Johor
- Dongfeng Motor Corporation - previously signed an MoU with NexV, although no further updates have emerged since the collapse of Neta Auto
- GAC Aion - Tan Chong
- GWM - EPMB for the GWM Tank 500 Hi4-T, although its EVs remain CBU imports
- Honda - own plant in Melaka in partnership with DRB-Hicom, although no EV CKD plans have been announced
- Hyundai / Kia - Inokom, with no EV CKD plans announced
- Jetour - Berjaya Assembly, with no EV CKD plans announced
- Leapmotor - Stellantis plant in Gurun, Kedah
- Mazda - Inokom, with no EV CKD plans announced
- Mercedes-Benz - DRB-Hicom in Pekan, Pahang
- MG Motor - EPMB
- Nissan - Tan Chong plants in Segambut and Serendah, with no EV CKD plans announced
- Perodua - own plant in Sungai Choh, with plans to purchase or contract assemble at Tan Chong Serendah
- Peugeot - Stellantis plant in Gurun, with no EV CKD plans announced
- Porsche - Inokom, with no EV CKD plans announced
- Proton - dedicated EV assembly plant in Tanjong Malim
- Toyota - UMW under Sime, with no EV CKD plans announced
- Volkswagen - DRB, with no EV CKD plans announced
- Volvo Cars - own plant in Shah Alam
- Wuling - Tan Chong Segambut
- Xpeng - EPMB

The Chery Group was not included in the list above due to its broader manufacturing activities in Malaysia. The Chery Omoda E5 is already being assembled at the Inokom facility in Kulim, while the group also operates its own plant in Shah Alam. The iCaur 03 is also expected to begin CKD assembly in Malaysia.

In addition, Chery is constructing a new factory in Lembah Beringin, Hulu Selangor. According to MITI, the company received a manufacturing licence without the conditions imposed on BYD because the agreement had been signed before the September 2025 cut-off date. The same exemption applies to all existing automotive plants in Malaysia.

Finally, Zeekr, owned by Geely, has announced plans to establish its own assembly plant in Tanjong Malim, with the CKD Zeekr 7X expected to enter production in 2027 at the earliest. It remains unclear whether Zeekr will be subject to the same factory requirements imposed on BYD or whether it will be allowed to operate under Proton's existing framework.