Malaysia’s Emerging Role in the Electric Vehicle Supply Chain: A Strategic Shift

Malaysia is strategically positioning itself as a crucial hub in the electric vehicle (EV) industry, leveraging on its longstanding expertise in electronics and semiconductors. The country’s industrial journey, evolving since the 1970s, was recently highlighted by Tengku Zafrul Abdul Aziz, the Minister of Investment, Trade, and Industry. He emphasized the transformation of local firms into key players in global value chains, strengthening Malaysia’s international standing. One example is the Joint Venture between Geely’s ZEEKR and Malaysia’s Proton signed in 2017 under which Malaysia’s national carmaker Proton can utilize the EV technology platform of Geely.

Central to Malaysia’s transition into the EV sector is its robust electronics ecosystem, capable of supplying over 1,400 vital components for EVs. This ecosystem extends beyond mere car production, representing a diverse convergence of industries aimed at sustainable automotive solutions.

Between 2018 and early 2023, Malaysia’s EV industry received investments totaling 26.2 billion ringgit (around $5.4 billion), a testament to the growing market confidence in this sector. Concurrently, the number of registered EVs has been steadily increasing.

The Malaysian government is proactively supporting this shift. Zafrul, who also chairs a national EV strategy committee, outlined the government’s initiatives, including tiered tax incentives and lower road taxes for EVs in the 2024 draft budget. Additionally, there are plans to simplify the regulations for installing charging stations, a crucial element in promoting EV adoption.

Significant changes are occurring in Malaysia’s auto industry, including a major merger to align with global electrification trends. Furthermore, the country is attracting substantial international investments from leading chipmakers, marking its progression in high-end semiconductor and chip design sectors.

Zafrul also highlighted the strategic opportunities presented by the U.S.-China trade tensions and shifts in global supply chains, positioning Southeast Asia, especially Malaysia, to broaden its market share. As a result, Malaysia is expanding the network of charging stations which is vital.  These stations are integral to the widespread adoption of EVs, ensuring convenience and reliability for users. With these developments, Malaysia is not only meeting its sustainability goals but also cementing its role as a significant player in the global EV market, ready to harness opportunities in the evolving automotive landscape.