Malaysia Tightens Electric Vehicle Import Thresholds: Chinese Automakers Face a "Calibration" Moment

"The recent wind direction seems a bit off."

A senior executive of an automaker responsible for the Southeast Asian market told Auto Industry Chronicle.

Starting July 1 this year, all electric vehicles imported fully into Malaysia (CBU) must simultaneously meet two new conditions: a minimum landed price of not less than 200,000 Ringgit (approx. 330,000 RMB), and motor power of no less than 180kW.

This does not include the restored import tax, consumption tax, and sales tax.

The reasons provided by the other party are also very sound: first, to protect local automotive brands and create space for their development, and second, to prevent Malaysia from becoming a dumping ground for excess electric vehicle production capacity from other countries.

When the model of relying on price advantages to quickly distribute goods several years ago no longer works, it also means that Chinese brands must readjust their layout thinking: either accelerate localization production or be squeezed out of the market by high tariffs.

From "Tax Exemption Dividends" to "Additional Clauses"

From 2022 to 2025, to support the rapid popularization of the electric vehicle industry, Malaysia issued a temporary relaxation policy: for electric vehicles above 100,000 Ringgit, import tax and domestic tax were exempted, only 10% sales tax was levied.

Top 20 Malaysian Electric Vehicle Brand Registrations in 2025

The generous policy dividends also attracted many Chinese brands to enter quickly.

In the top 10 Malaysia Electric Vehicle Sales Rankings for 2025, BYD, Zeekr, Chery, XPeng, and Denza all made the list (Proton ranked 2nd is strategically controlled by Geely).

BYD had held the title of local electric vehicle sales champion for three consecutive years. Taking advantage of the hot sales momentum, in August 2025, BYD announced the landing of a CKD complete vehicle assembly factory at KLK Science Park, Tanjung Malim, Perak, with a planned annual capacity of 50,000 units and an estimated investment of about 1.3 billion Ringgit.

After obtaining the temporary manufacturing permit at the end of September of the same year, the project progress advanced rapidly.

However, an accident occurred.

In March 2026, local media reported that BYD's Tanjung Malim factory construction showed "signs of suspension".

"Government requires BYD factory 80% capacity must be exported" and "Local selling price must not be less than 200,000 Ringgit" once circulated on the internet.

In response, the Malaysian Ministry of Investment, Trade and Industry (MITI) issued a special clarification. The rumor of "80% capacity must be exported" was actually an additional clause limitation:

The annual local sales cap for this factory is 10,000 units, and this quota exactly accounts for 20% of the project's planned total capacity, and the 10,000 unit quota is a production framework jointly agreed upon by multiple parties.

Additionally, the on-road price of locally assembled CKD vehicles must not be less than 100,000 Ringgit, not 200,000.

MITI repeatedly emphasized, the additional clauses were not targeting BYD, but applied to all new automotive investment projects in Malaysia starting from September 2025, except for projects using existing local assembly facilities.

BYD Dolphin Right-Hand Drive Version

But the policy implementation node happened to coincide with BYD's factory construction cycle, inevitably leading to speculation.

After winning the local electric vehicle sales champion for three consecutive years, BYD started factory construction in September 2025, the timing was exactly covered by the new rules. Meanwhile, BYD's popular Dolphin, Atto 2, Seal models locally were priced around 100,000 Ringgit.

In the view of industry insiders, on one hand, they cannot launch models below 100,000 Ringgit, on the other hand, they are constrained by an annual domestic sales cap of 10,000 units, and the additional clauses also require the complete vehicle assembly process to be in local supporting welding workshops, coating workshops, and final assembly workshops, obviously increasing costs. The three major limits force BYD to reconsider the value of this project.

It is not only BYD affected by this.

"The additional clauses came out particularly suddenly. We were supposed to start work on local layout in Malaysia this year, now we are negotiating adjustments again." A senior executive of a central enterprise overseas told Auto Industry Chronicle candidly.

NO.2Were We Targeted?

So, were Chinese brands deliberately targeted?

In fact, behind the additional constraint clauses issued by Malaysia lies a macro consideration based on the domestic industrial chain and employment stability.

Malaysian Minister of Investment, Trade and Industry Zahari Abdul Ghani explained that the relevant clauses treat all countries and brands equally, aiming to drive local assembly production capacity towards sustainable, high-value-added market segments, while avoiding replacement shocks to the existing local supplier ecosystem.

At the same time, the clause is export-oriented as its core, aiming to enable foreign investment to help Malaysia balance trade income and expenditure and deeply integrate into the global supply chain.

Industry insiders pointed out that this does not limit the total factory capacity, but is a strategic policy guiding enterprises to develop with exports as the core.

Malaysia hopes to get rid of the pure "import selling" model and expand the added value of local industries.

Currently, local brands Perodua and Proton have long occupied more than 60% of the mainstream share of the passenger car market. The industrial system supporting hundreds of parts manufacturers provides over 700,000 employment positions and is the cornerstone of stable local industrial development. Introducing advanced Chinese electric vehicle technology and industrial systems helps to quickly improve the development level of the local industrial chain.

As MITI also emphasized, projects using existing local assembly facilities are not subject to the newly issued additional clauses.

NO.3Chinese Brands Have Their Own "Tricks"

The localization layout of Chinese automakers is showing differentiation: some are trying to build independent capacity, while others choose to "borrow a boat to go overseas", embedding into the local industrial chain with lower policy risk through joint ventures or shared local production lines.

Just not far from Tanjung Malim, in Beringin High-Tech Automotive Valley, Selangor State, construction progress has never stopped.

In 2025, Chery adopted a joint venture model with local capital to build a smart automotive industrial park, with the first phase planning an annual capacity of 100,000 units, expandable to 300,000 units, and expected to start production in the second half of 2026.

Chery iCar officially rolls off the production line

Chery is one of the earlier Chinese automakers to obtain formal complete vehicle manufacturing qualifications in Malaysia. Besides the smart automotive industrial park under construction, it currently owns two production bases in the local area:

One is a CKD contract factory in cooperation with local enterprise Inokom, mainly responsible for fuel and hybrid model assembly production; the other is a wholly-owned complete vehicle factory located in Shah Alam, Selangor State, officially put into production in 2024, focusing on Jaecoo, Omoda high-end series and iCar new energy vehicle models.

Proton e.MAS 5

Geely did not build a factory, but chose the cooperation route.

In 2017, Geely entered the market by acquiring a 49.9% stake in the local automaker Proton. After years of development, relying on local CKD assembly and Geely technology empowerment, Proton's new energy sub-brand e.MAS series has flexible pricing space, with the entry-level pure electric model e.MAS 5 starting price only 56,800 Ringgit.

In 2025, Proton pure electric models registered 8,890 units, ranking second; from January to May 2026, cumulative registration was 11,642 units, climbing to the sales top with significant advantages.

Zeekr, as a high-end pure electric brand under Geely, focuses on SUV and MPV as the core promoted models in the Malaysian market.

Relying on the strategic cooperation between Geely and Proton to share local production lines, it does not need to build a new factory. Recently, Zeekr 7X will also undergo local CKD assembly, completing the transformation from pure complete vehicle import to localization production.

XPeng also chose to borrow local factories and existing production lines, adopting the CKD loose assembly mode for vehicle assembly. Just the day before yesterday, XPeng Automotive announced that its EPMB factory located in Malacca, Malaysia officially started production, and the first batch of G6s also officially rolled off the production line.

A head of a certain automaker preparing to enter the Malaysian market sighed that the local automotive consumption market volume is considerable, and relying on the ASEAN Free Trade Agreement, vehicles produced locally for export to neighboring countries such as Vietnam and Indonesia can enjoy preferential tariffs, and as an export track it still has stable development space.

"But adjustments to the implementation rhythm and plan are necessary."

NO.4The Market is Huge, but Risks are Not Small Either

In recent years, Chinese automakers have gone overseas in groups to seek new growth breakthroughs.

Southeast Asia has become the first stop for overseas expansion for many brands. The gasoline vehicle market here has long been monopolized by Japanese brands, electrification started relatively late, and the local industrial chain is weak. Chinese automakers, relying on the generational advantage in tri-electric technology, cost control, and intelligence, can quickly fill the market gap and form dimensional reduction strikes.

On the other hand, these countries are also willing to open their doors wide to attract investment.

Taking Thailand as an example, its Board of Investment (BOI) provided heavy benefits such as 10-13 years exemption on corporate income tax for landing automakers, which also attracted many overseas automakers to enter.

But, there is no free lunch in the world.

BOI also set strict performance conditions; automakers need to complete indicators such as specified investment amount, localization procurement ratio, annual production, etc. If standards are not met, BOI can adjust or revoke some incentives and demand recovery of tax benefits already enjoyed plus penalty interest.

"This year is the concentrated expiration node of performance agreements. To complete indicators, Chinese automakers have also started price wars in Thailand. The industry 'involution externalization' phenomenon is obvious." A head of an automaker said.

With the improvement of local industrial chain maturity, the tightening of foreign investment import, factory construction, and export related rules has become a long-term trend, and the development space relying on low prices and high volume is being continuously compressed.

"Automakers going overseas cannot only see short-term market dividends; they must assess long-term policy restrictions in advance." This head said.

NO.5Written at the End

For Chinese automakers, the window period for overseas "low price high volume" is narrowing.

Local policies will definitely continue to adjust, and the market pattern is far from set.

Although Southeast Asia is becoming a new battlefield for Chinese automakers to seek overseas growth, however, is this battlefield really easy to capture?