KUALA LUMPUR: Investment, Trade and Industry Ministry has introduced more stringent requirements for fully-imported electric vehicles (EVs) even as prices are expected to rise in 2026 due to the expiry of tax exemptions.
Under the ministry's updated franchise approved permit (AP) guidelines, newly-approved EV brands importing fully built-up (CBU) models into Malaysia will be subject to a minimum floor price of RM250,000.
This comes alongside a minimum power output requirement of 200kW or about 268 horsepower.
The guidelines were updated by the ministry on its website last month.
However, both conditions apply only to new vehicle brands that have not previously received franchise AP approval.
This means existing EV brands already operating in Malaysia are not affected by the new thresholds.
EV brands approved for import between 2023 and 2025 will continue to be governed by the RM100,000 floor price policy that has been in place over the past few years.
Despite this exclusion, industry observers expect fully-imported EV prices to increase in 2026.
"While the new AP requirements may not immediately affect existing EV players, the end of tax exemptions means price pressures for imported EVs are likely to intensify, accelerating the industry's shift toward local manufacturing," an observer said.
Import and excise duty exemptions for fully-imported EVs ended on Dec 31 last year, marking a key shift in the regulatory landscape.
While the government has yet to announce new duty rates, previous rates stood at 30 per cent for import duty and 10 per cent for excise duty, which could materially affect vehicle pricing if reinstated.
To mitigate the impact of higher taxes, automakers are increasingly turning to local assembly (CKD).
Locally-assembled EVs continue to enjoy excise duty and sales tax exemptions until the end of 2027, along with import duty exemptions on components, making CKD operations a more cost-effective route.
Beyond national carmakers Proton and Perodua, several brands have already assembled EVs locally.
They include Volvo (Shah Alam facility), Mercedes-Benz (Pekan plant), Chery (its own plant in Shah Alam and Inokom plant in Kedah), GWM (EP Manufacturing plant in Melaka) and TQ Wuling (Tan Chong Motor plant in Segambut).
The list is expected to expand in 2026, with BYD, Leapmotor, MG, BAIC and XPeng set to begin CKD operations.
Zeekr and Volkswagen have also committed to local assembly, although their timelines have yet to be confirmed.