KUALA LUMPUR, April 13 (Xinhua) -- Malaysia's shift towards battery electric vehicles (BEVs) is expected to remain gradual over the medium term, as structural infrastructure constraints and evolving fuel subsidy policies continue to support internal combustion engine (ICE) demand, according to research houses.
Kenanga Research said it maintains a balanced view on EV adoption, noting that while demand is expected to strengthen over time, the transition away from petrol vehicles will not peak within the next five years due to charging infrastructure gaps and affordability considerations.
The research house highlighted that BEVs currently benefit from tax exemptions for locally assembled completely knocked down (CKD) models until 2027, supporting early-stage adoption. However, it cautioned that Malaysia's evolving fuel subsidy framework could slow the migration from ICE to EVs in the near term, particularly among middle- and lower-income groups.
"The new petrol subsidy mechanism could make the transition even slower than earlier expected, as the middle- and lower-income segments now have less incentive to switch from ICE to EV for the time being," Kenanga said.
Despite the gradual outlook, Malaysia's EV registrations have expanded sharply in recent years, rising from just 274 units in 2021 to more than 3,400 units in 2022, 13,301 units in 2023, 21,789 units in 2024 and 44,800 units in 2025, equivalent to about 5.5 percent of total industry volume (TIV).
Malaysia has set an ambitious target for EVs to account for 20 percent of new vehicle sales by 2030 and 80 percent by 2050, including hybrid vehicles. To support this transition, the government is focusing on ecosystem development, including a target of 10,000 public charging points and continued tax incentives to stimulate both adoption and local assembly.
However, progress in charging infrastructure remains behind schedule, with only slightly above 50 percent of the target achieved, or 5,360 units as of end-December 2025. No updated timeline for full rollout has been announced.
Meanwhile, MBSB Research said in a recent note that petrol-powered passenger vehicles continued to dominate Malaysia's automotive landscape, accounting for 85 percent of 2025 registrations, followed by diesel at 6 percent, hybrids at 4 percent and EVs at 5 percent. This underscores the continued importance of fuel price dynamics for the bulk of consumers.
The research house added that mass-market petrol users under the government's subsidy program continue to benefit from capped fuel prices at 1.99 ringgit (0.5 U.S. dollar) per liter, helping to stabilize running costs for most households.
Hong Leong Investment Bank Research (HLIB) said in its recent note that prolonged periods of elevated global oil prices could eventually lead to upward pressure on subsidized fuel pricing, which may be marginally negative for ICE vehicle sales.
HLIB added that policy direction is likely to increasingly favor EV adoption over the longer term, reinforcing Malaysia's transition towards electrification even as near-term demand remains supported by subsidies and affordability considerations. ■