Here’s a big development in the Malaysian electric vehicle (EV) market, involving carmakers and consumers. The ministry of international trade and industry (MITI) has issued a new regulation for CBU fully imported EVs, which raises the entry barrier in two areas – declared CIF value (cost, insurance and freight) and minimum power output. Combined, these two requirements will ‘push out’ a swathe of mid-range EVs, leaving only premium options. In a circular to franchise approved permit (AP) holders sighted by paultan.org, MITI said that from July 1 this year, CBU EVs imported into Malaysia will need to have a CIF value of no less than RM200,000, and a minimum power output of 180 kW, which is equivalent to 245 PS or 241 hp. Ready stock and cars that are in transit are exempted from this new rule. How does this impact CBU EV pricing? The new RM200k CIF value and minimum 180 kW will supersede the current requirements of a minimum selling price of RM250,000 and minimum output of 200 kW (272 PS or 268 hp). On the surface, this appears to be good thing – RM200k versus RM250k. However, CIF refers to the actual value of the car as it lands in Malaysia, before local taxes/duties and the margins of the distributor and dealer. Let’s take an EV from China for a rough calculation. Assuming that a car has the minimum CIF value of RM200k, it will attract a minimum of 5% import duty + 10% excise duty + 10% sales tax, bringing the effective cost for the distributor up to RM250k. Now, factor in a rough estimated margin of 10% for the distributor/principal and 10% for the dealer and you’ll arrive at a RRP of at least RM300,000. Bear in mind that our example uses the more favourable import duty from China. Should an EV hail from Europe or South Korea, the import duty will be 30% instead of 5% – this brings the RRP to at least RM360,000. Also, margins are unlikely to be as slim as our 10% example. Interestingly, the MITI letter also says that beyond the new CIF and power output clauses, CBU EVs coming into Malaysia also need to conform to the previous list of conditions dated December 29, 2025, which listed a floor price of RM100k. While unlikely, this potentially opens the window for brands to skirt around the new policy if they are open to over-declare CIF values. Taxes and duties paid to the government will be based on the inflated CIF, of course. If we see any CBU model priced well below RM300k come July, we’ll know that the brand took the hit. Only EVs with 245 PS and up can be imported Here’s the ‘insurance’ in case the first shot doesn’t do the job, so to speak. The minimum power output requirement of 180 kW (245 PS or 241 hp) effectively limits the importation of less powerful EVs that are usually smaller in size and more mass market in positioning. For context, let’s take a look at BYD. Currently, the EV giant’s entire lineup in Malaysia is CBU imported but only the Seal and Sealion 7 meet the minimum 180 kW requirement – this means that unless they’re locally assembled, the Dolphin, M6, Atto 2, Atto 3 and Seal 6 will no longer be allowed to be sold here. For the two surviving sea creatures, the Seal and Sealion 7 are currently priced below RM200k, which means that their CIF figures are well below RM200k – even if this value can somehow be inflated to meet MITI’s new CIF requirement, would anyone pay in excess of RM300k for those models when everyone knows the ‘true’ tax-free price. So, while it’s not worded as such, is this effectively a ban on non-premium CBU EVs? How did we get here? A timeline of U-turns and moving goalposts Let’s trace the spiral staircase that led to this. It all started with the opening of a window, a window of tax breaks for EVs to spur adoption in Malaysia. In Budget 2022, the government announced full exemption of import and excise duties for all CBU EVs, which would kick in on January 1, 2022. A minimum price of RM100k was set to prevent a deluge of cheap imports from China. This window was supposed to be open till the end of 2023, after which only CKD EVs would continue to enjoy tax breaks. However, the Madani government gave multiple extensions, before the window was finally shut on December 31, 2025. Up until then, the auto industry assumed that while taxes and duties would be applied to CBU EVs, the minimum price of RM100k would continue. However, on the last day of last year, MITI announced new requirements and regulations for CBU EVs effective January 1, 2026. That document listed a minimum power output of 200 kW (272 PS or 269 hp) and a selling price of no less than RM250k – however, the T&Cs would only apply to new-to-Malaysia brands that are yet to receive franchise APs. This means that while the likes of BYD would now need to pay import and excise duties, the RM100k floor price rule remained. Only three weeks later, on January 21, MITI released an updated document saying that the RM250k floor price – previously only applicable to incoming brands – would now apply to new brands and new models under a franchise AP. The latter refers to new models from a brand that’s already in Malaysia. Still with us? With this update, a model that’s already on sale in here (like an Atto 3, for instance), will continue to have a floor price of RM100k, but a fresh model from the brand (say the Sealion 8), would have to adhere to the new RM250k minimum price. On the other end of the scale, a CBU Atto 1 would not be allowed in as it does not meet the 200 kW minimum power output criteria. Now, with this latest update dated April 29 but effective July 1, MITI has once again shifted the goalposts. We’re now seeing the move from selling price to CIF value, allied with minimum power output. Significantly, it’s a blanket requirement for all CBU EVs in Malaysia, whether existing or upcoming. Following the BYD example (because they have the widest range of EVs in Malaysia), existing models like the Sealion 7 would see a price hike from RM184k to at least RM300k (based on a minimum CIF price of RM200k, as explained above), should the company want to continue selling the model. As illustrated earlier, the bulk of BYD’s range in Malaysia will now be outlawed for not meeting the 180 kW minimum power output. In the same boat are EVs like the MG4, GWM Ora Good Cat, iCaur 03 and V23, MINI Cooper and Aceman SE, Honda e:N1 and even Toyota’s freshly-launched EVs like the Urban Cruiser and bZ4X. Honda Malaysia wanted to bring in the Super-One, but the fun little thing won’t make it even with twice the power. Making enough kilowatts to escape this hurdle are EVs like the BYD Seal and Sealion 7, Zeekr X and 7X, Xpeng G6, smart #1/#3/#5 and the GWM Ora 07 – however, most of these models will see RRPs rise sharply overnight on July 1 (unless it’s existing stock), with some prices doubling. Spare a thought for the distributors, dealerships and personnel of these CBU-heavy brands – they might be used to overnight policy changes without much consultation, but this is a big one that asks the question: is the business still viable? A Thanos moment? One snap and all Proton eMas 7 rivals vanish The Malaysian EV landscape will look very, very different after MITI snaps its fingers. There will be no more EV options below RM300k except for the few models that are already, or will be locally assembled. Of the top 20 best-selling EVs in March 2026 (the most recent available data), only five models would be unaffected: the Proton eMas 5 (a CBU import from China, but with special dispensation), Proton eMas 7 (CKD), TQ Wuling Bingo (CKD), Volvo EX30 (CKD) and the Zeekr 009, which is already priced above RM300k. We already hear the popping of sparkling juice bottles in one office. The Proton eMas 5, already Malaysia’s best-selling EV, will be enjoying a double fold of invaluable special dispensations. The first one is the classic CKD-bridging programme that allows Proton to bring in substantial numbers of CBU units (of undisclosed volume), and sell them below RM100k although the cars are imported from China. Back in the ‘ICE age’, the Proton X70 famously enjoyed this advantage in the market. The second one is being able to sidestep the new CBU EV power output and CIF value requirements altogether, while its rivals vanish. MITI’s 180 kW hurdle means that a typical mass market brand C-segment EV like the BYD Atto 3, iCaur 03, Leapmotor B10 and Nissan Leaf would fail to meet the minimum power output, and therefore will no longer be allowed to be sold in Malaysia from July 1. Conveniently, these models happen to be the Proton eMas 7’s direct rivals. Mere coincidence? Pop! Unless there’s a U-turn, this Thanos moment by MITI will leave a big gap in the local EV market, with very few options in the RM100k to RM300k range. It will be an artificial gap too, as models from a segment above the eMas 7 that survived the power output purge (think BYD Sealion 7, Zeekr 7X and Xpeng G6) will have their pricing doubled to above RM300k. Not many would pay three times the price to upgrade to the next segment, and perhaps that’s the idea. Of course, let’s not forget that these hurdles are designed for CBU imports, and brands can sidestep the obstacle ahead by setting up local assembly programmes. Today’s MITI, under Datuk Seri Johari Abdul Ghani, has been direct and consistent on the need to protect investments made by national companies and local vendors. Also, the free-for-all bonanza that was the CBU EV tax-free window was always going to be closed someday. CKD plans of the brands – the have and the have-nots The clauses may have changed more than once, and this latest move is abrupt, but the carmakers knew full well that their easy CBU EV business model would one day be no longer viable. As such, some have started CKD, many have at least expressed their intention to locally assemble, and a few are starting soon. The line-off ceremony of the CKD MG S5 happened in March, making the SAIC Motor brand the first off the blocks in this new era. The S5 EV rolls off the line at EPMB’s Pegoh, Melaka plant, which will also assemble Xpeng’s EVs – you’ll hear more about it this month. Zeekr’s CKD work will not happen at this burgeoning ‘Chinese CKD hub’ as the premium brand is under Geely, which is a main mover of the Automotive Hi-Tech Valley (AHTV) in Tanjong Malim, anchored by Proton. Malaysia will be the first country outside of China to assemble Zeekr vehicles in a global expansion plan, and the first model is the 7X SUV. Leapmotor – which international operations is handled by stakeholder Stellantis – has a big asset in the ex-Naza plant in Gurun, Kedah. This facility will roll out Leapmotor’s C10 and B10 electric SUVs. “That’s where my advantage comes in. I’m one of the few OEMs who have a plant in Malaysia. If today I sell at RM125k, CKD I will still sell at RM125k. That’s my advantage compared to all the new players in the market, because I have a plant and it’s fully amortised. We will still keep the MRSP (for the C10) even if the incentive goes away. If the tax (free scheme) goes away, I don’t need two years to CKD – I’m there!” Stellantis ASEAN MD Isaac Yeo told paultan.org last year. Full interview here. The Chery Group is very well placed thanks to its early entry and fast progress, backing up model launches and investment claims with actual plants in Shah Alam, and soon, Lembah Beringin in Hulu Selangor. The group’s iCaur EVs will soon be CKD, and speed is Wuhu’s strength. There’s a big elephant in the room though, and it’s BYD. The EV giant also has CKD plans – in its home rival’s Malaysian turf of Tanjong Malim no less – but it hit a snag recently when MITI announced new regulations. In a March 31 statement addressing the issue, which had gone viral, MITI’s Johari said that BYD (and all new EV plants after September 2025) will have to abide by a floor price of RM100k, an output split of 80% export/20% domestic sales, and the mandatory inclusion of a paint shop, which is a costly element in a car factory and a sign of ‘serious work’ being done there, so to speak. Failure to meet any of the newly imposed regulations would mean that BYD would not be issued a manufacturing license to run a CKD operation. It’s clear that the most challenging item on the list is the 80% export requirement, which is unrealistic for BYD as it already has CKD plants in both Thailand and Indonesia, never mind the huge capacity the company has back home in China. If neither party is willing to budge in this impasse, BYD will have no feasible CBU cars to sell (except for high-end Denza models that will naturally have RRPs of above RM300k) and no CKD plant to build its bread and butter models from. While MITI says that the conditions are non-discriminatory and are not unique to BYD, is this akin to setting requirements that are ‘impossible’ to achieve so that the other party walks away ‘on his own accord’? Pop! If you’re wondering about the manufacturing licenses of the other brands, they’re either contract assembled at existing plants (MG and Xpeng at EPMB, Wuling at Tan Chong) or they have their own assets (Leapmotor at Gurun). Zeekr has announced that it will set up its own assembly plant in Tanjong Malim, with the CKD 7X expected to be rolled out in 2027 at the earliest. It remains to be seen if the Geely-owned brand is subject to the same requirements as BYD, or if it will be allowed to operate under stablemate Proton’s ‘umbrella’. As for Chery’s upcoming Lembah Beringin factory, it was granted a manufacturing license without the T&Cs imposed on BYD, as the Wuhu carmaker had signed the agreement before the September 2025 cut-off date, according to MITI. Ditto the other auto plants in Malaysia. Finally, Tesla. From day one, Elon Musk’s EV company enjoyed its own special lane in Malaysia. That lane is called the BEV Global Leaders scheme, of which Tesla is the sole member. Benefits include being the only car company in Malaysia to receive franchise APs without the need for a bumiputera partner. With CKD completely out of the question, will Tesla have to raise prices to above RM300k or will its BEV Global Leaders status help it breeze past July 1 unscathed? We’ll see. A scramble now, a drought ahead? As mentioned, stock that is already in Malaysia and cars that are on the way here are exempted from the new RM200k CIF/minimum 180 kW rule and can be sold at existing prices, but beyond that, brands that are CBU-heavy will have to find some cars to sell. Setting up CKD operations takes time, and how big or small the gap between July 1 and their CKD roll-off will dictate their market competitiveness. Two months is very short notice and had the policy been clear from the start of the year, it’s likely that the OEMs would have had CKD operations up and running by July. They will now be scrambling, and there’s likely to be a drought ahead – not just for the brands, but for the dealerships and sales personnel too – once stock levels are depleted. For the consumer, aside from a sharp drop in options and higher prices, expect a bigger delay for upcoming launches versus China as the carmakers will have to prepare a CKD programme. Each brand will have its own issues to deal with – contract assemblers might not have extra ‘room’ for them, some with their own plant might not have the capacity to assemble more than one model at a single time, there might be bottlenecks in QC, etc. It can be argued that the spirit behind this new MITI ruling is for greater good, to protect our local automotive ecosystem, but we can’t help but wonder if it – plus the high export requirements for new car plants – will discourage brands that are not yet in Malaysia to set up shop here. The fact that the constant moving of goalposts is no longer surprising to us is sad, but could this latest episode be the proverbial straw that breaks the camel’s back? Winners Proton is the clear winner. The eMas 7’s competition will be effectively wiped out overnight. BYD’s CKD block means the eMas 5 will have the market to itself too. Perodua, but to a much lesser extent. P2 is always mentioned alongside Proton in MITI’s rationale, but protection won’t help the Q-VE’s cause and P2’s main rival will get stronger from this. Premium EV brands. If EVs currently in the RM150k to RM200k segment have to double up RRPs, those already playing above the RM300k zone will have an advantage. Price gap to them will be much smaller. Losers BYD is the biggest loser. Its entire lineup will either be outlawed for not being powerful enough, or priced beyond competition. Zeekr. CKD for the 7X is expected to only start next year, meaning that the model’s momentum will be disrupted. Tesla, maybe. CKD is impossible, so the entire range will have to face huge price hikes. However, this latest MITI ruling is addressed to franchise AP holders, and it’s unclear if the same will apply to Tesla, which has a BEV Global Leaders ‘special lane’. Toyota. All its newly-launched EVs will be wiped out at the start, although one gets the feeling that Toyota won’t be losing much sleep on failed EVs. Brands planning to enter Malaysia. Changan, Hongqi and Arcfox, just to name a few, missed the window. They will have to enter with CBU models and a high floor price. Product plans might need to change. Malaysian EV buyers. We’ll have significantly fewer options between RM100k and RM300k. Proton eMas will have the market to all to its own, and we all know what lack of competition leads to. Those who are old enough to have experienced the Malaysian car market changes in the 1980s, deja vu? It’s understandable for the government to push protectionist policies – #kitajagakita right? – but it’s amusing that in this case, the party being shielded is a thinly-veiled Geely venture and the big bad wolf is a compatriot. As BYD and Geely slug it out in the ultra-competitive China market, it looks like Hangzhou has landed a big blow on Shenzhen in this turf called Malaysia. Looking to sell your car? Sell it with Carro. Compare prices between different insurer providers to save the most on your car insurance renewal compared to other competing services. Many payment method supported and you can pay with instalment using Atome, Grab PayLater or Shopee SPayLater. Use the promo code 'PAULTAN' when you checkout for 10% discount!
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