Experts tell who benefits from govt’s electric vehicle incentives

The government’s announcement in the 2022 budget on the giving of incentives to electric vehicle (EV) owners does not mean that the price of such cars will drop to the point that they become affordable for all segments of society, experts in the automotive industry say.

Speaking to MalaysiaNow, they said while prices might go down, they would still top hundreds of thousands of ringgit, making EVs accessible only to the rich.

They also said that the government’s intention in announcing the incentives was to help industry players given the lacklustre sale of EVs in the country.

Chips Yap said the new technology used in the production of EVs is what makes them more expensive than traditional cars which run on fuel.

He said car manufacturers have spent billions of ringgit on research and development and are still unable to raise investment capital.

“It’s not the same as a combustion engine vehicle. That technology is mature as it has been in the development process for over 100 years,” Yap, who is also managing editor of the Piston.My group, told MalaysiaNow.

“So manufacturing companies need help from the government to facilitate EV sales, especially at the early stage, allowing them to be sold at cheaper prices through various incentives.”

During the budget presentation last month, the government had proposed full exemptions on import duties, excise duties and sales tax for EVs as well as road tax exemption of up to 100%.

It also announced individual income tax relief of up to RM2,500 on the cost of purchase and installation, rental and hire purchase of facilities as well as the payment subscription fees for EV charging facilities.

Yap said even with these exemptions, the price of EVs might not meet general expectations.

He gave the example of Hyundai’s Kona Electric, sales of which will begin later this month.

“Even though the company said the price would be under RM150,000, there is a high chance of it remaining at that level after factoring in the cost of insurance,” he said.

“So the price is still not low enough. If the goal is to make EVs popular in the Malaysian market, the price needs to match at least the Toyota Vios or the Honda City.”

Some had expressed dissatisfaction with the budget announcement by Finance Minister Tengku Zafrul Aziz, saying the incentives would only benefit a certain group.

To this, automotive analyst Hezeri Samsuri said it would be impossible for EV companies to offer prices as low as those of affordable vehicles as this would see them incurring huge losses.

He said it would make no sense for these companies to do so as they need to take into account their profit margin before putting any product in the market.

“The technology for EVs is something new, and it uses so-called exotic materials,” he said.

“The price will be high in the beginning but as demand grows, it will become more affordable. For now, EVs are attractive mostly to the T20 group and those who want something different because there is no strong reason to switch to EVs.”

He said those in the middle-income or M40 group might be able to afford EVs as well, but only those in the second-hand market.

“As long as there is no legislation punishing those whose vehicles emit smoke, and as long as fuel prices remain low, EVs in Malaysia will remain a lifestyle option.”