Malaysia's electric vehicle (EV) market is set to undergo regulatory changes affecting both carmakers and consumers.

The Ministry of Investment, Trade and Industry (MITI) has introduced new regulations for fully imported completely built-up (CBU) EVs, raising the entry threshold in two areas: declared CIF value (cost, insurance and freight) and minimum power output. These requirements are expected to reduce the availability of mid-range CBU EVs, leaving a greater concentration of premium-positioned models in the market.

In a circular issued to franchise approved permit (AP) holders and sighted by the media, MITI stated that from July 1st this year, CBU EVs imported into Malaysia must have a minimum CIF value of MYR 200,000 (US$ 51,000) and a minimum power output of 180 kW, equivalent to 245 PS or 241 hp. Existing stock and vehicles already in transit are exempt from the new regulations.

Impact on CBU EV pricing

The new MYR 200,000 CIF value and minimum 180 kW output requirements replace the previous conditions of a minimum selling price of MYR 250,000 and a minimum output of 200 kW (272 PS or 268 hp). While the reduction from MYR 250,000 to MYR 200,000 may initially appear lower, CIF refers to the value of the vehicle upon arrival in Malaysia, before local taxes, duties, and distributor or dealer margins are applied.

Using an EV imported from China as an example, a vehicle with the minimum CIF value of MYR 200,000 would attract at least 5% import duty, 10% excise duty, and 10% sales tax. This would raise the distributor's effective cost to approximately MYR 250,000. After adding estimated distributor and dealer margins of around 10% each, the resulting recommended retail price (RRP) would exceed MYR 300,000.

This example assumes the lower import duty applicable to vehicles from China. EVs imported from Europe or South Korea would attract a 30% import duty instead of 5%, increasing the estimated RRP to more than MYR 360,000. Distributor and dealer margins may also be higher than the illustrative 10% assumption.

The MITI letter also states that, in addition to the new CIF and power output conditions, imported CBU EVs must continue complying with earlier conditions dated December 29th, 2025, which included a minimum selling price of MYR 100,000. This potentially leaves room for brands to declare higher CIF values in order to meet the new threshold, although taxes and duties would then be calculated based on the declared amount. Should any CBU EV remain priced significantly below MYR 300,000 after July 1st, it may indicate that the importer absorbed part of the additional cost.

Only EVs with 245 PS and above qualify

The minimum power output requirement of 180 kW (245 PS or 241 hp) also limits the importation of lower-output EVs, which are generally positioned as smaller and more mass-market products.

Using BYD as an example, only the Seal and Sealion 7 currently meet the 180 kW requirement among the company's Malaysian CBU line-up. Models such as the Dolphin, M6, Atto 2, Atto 3, and Seal 6 would no longer qualify for sale unless local assembly operations are introduced.

Although the Seal and Sealion 7 meet the output requirement, both are currently priced below MYR 200,000, indicating that their CIF values are also below the new threshold. Even if the CIF values were increased to comply with the regulations, retail pricing could rise beyond MYR 300,000. This raises questions regarding the commercial viability of non-premium CBU EVs under the revised framework.

Timeline of regulatory revisions

The current situation follows several revisions to Malaysia's EV import regulations. In Budget 2022, the government announced full exemptions from import and excise duties for all CBU EVs beginning January 1st, 2022. A minimum price threshold of MYR 100,000 was introduced to limit low-cost imports.

The exemption period was initially scheduled to end in 2023, after which only locally assembled CKD EVs would continue receiving incentives. However, the Madani government extended the programme first to the end of 2024 and later to the end of 2025. The exemption period ultimately ended on December 31st, 2025.

Until that point, the automotive industry generally expected that, although taxes and duties would eventually return for CBU EVs, the MYR 100,000 minimum price requirement would remain unchanged. On December 31st, 2025, MITI introduced new conditions effective January 1st, 2026, including a minimum power output of 200 kW and a minimum selling price of MYR 250,000. These requirements initially applied only to new brands entering Malaysia and seeking franchise AP approval.

As a result, existing brands such as BYD became subject to import and excise duties, but the MYR 100,000 floor price remained applicable to their existing models.

On January 21st, MITI revised the framework again. Under the updated conditions, the MYR 250,000 minimum price would apply not only to new brands, but also to new models introduced by brands already operating in Malaysia.

Under that structure, existing models such as the BYD Atto 3 could continue under the MYR 100,000 floor price, while new models introduced later would be required to comply with the MYR 250,000 threshold and minimum power output conditions.

The latest update, dated April 29th and effective July 1st, replaces minimum selling price requirements with CIF-based thresholds combined with a lower minimum output requirement of 180 kW. The new rules apply to all CBU EVs, including existing models already on sale.

Effect on current EV models

Based on the new framework, several existing EV models in Malaysia may become commercially unviable or ineligible for importation.

Using BYD as an example, the Sealion 7, currently priced around MYR 184,000, could see pricing rise above MYR 300,000 if the company continues importing the model under the revised CIF requirements. Much of BYD's Malaysian range would also fail to meet the 180 kW minimum output threshold.

Other affected models could include the MG4, GWM Ora Good Cat, iCaur 03 and V23, MINI Cooper and Aceman SE, Honda e:N1, and Toyota models such as the Urban Cruiser and bZ4X.

Higher-output EVs such as the BYD Seal and Sealion 7, Zeekr X and 7X, Xpeng G6, smart 1, 3 and 5, and the GWM Ora 07 meet the minimum power requirement. However, many of these vehicles may experience significant price increases after July 1st unless exempted as existing inventory.

The regulatory changes also create uncertainty for distributors, dealerships, and personnel associated with brands heavily dependent on CBU imports, particularly regarding long-term business operations.

Impact on Malaysia's EV market structure

The revised regulations are expected to reduce the number of EVs available between MYR 100,000 and MYR 300,000 unless those vehicles are locally assembled.

Among the 20 best-selling EVs in March 2026, only a limited number would remain unaffected, including the Proton eMas 5, Proton eMas 7, TQ Wuling Bingo, Volvo EX30, and the Zeekr 009. The Proton eMas 5 benefits from a CKD bridging arrangement that permits imported units to be sold below MYR 100,000 despite being sourced from China. The model is also exempt from the new CBU EV CIF and power output conditions.

The 180 kW requirement would exclude several direct competitors to the Proton eMas 7, including the BYD Atto 3, iCaur 03, Leapmotor B10, and Nissan Leaf. Unless further revisions are introduced, the regulations are expected to create a gap in Malaysia's EV market between MYR 100,000 and MYR 300,000.

Shift towards local assembly

The revised framework places greater emphasis on local CKD assembly operations, encouraging manufacturers to establish domestic production facilities.

Several brands have already initiated or announced CKD plans:

- MG's S5 EV has entered local assembly at EPMB's Pegoh, Melaka facility.
- Xpeng models are also expected to be assembled at the same plant.
- Zeekr plans to establish assembly operations in Tanjong Malim, with the 7X SUV expected to become the first locally assembled model.
- Leapmotor plans to utilise Stellantis' Gurun, Kedah facility for the C10 and B10 electric SUVs.
- Chery has assembly operations in Shah Alam and is preparing a second plant in Lembah Beringin.

BYD's proposed CKD plans in Tanjong Malim have faced additional regulatory conditions introduced by MITI.

These include:

- A MYR 100,000 floor price;
- An export ratio requiring 80% of production to be exported and 20% allocated for the domestic market; and
- Mandatory inclusion of a paint shop facility.

Failure to comply with these conditions would prevent the issuance of a manufacturing licence.

The 80% export requirement may present challenges for BYD, given its existing manufacturing operations in Thailand, Indonesia, and China. Tesla also remains a separate case within the Malaysian EV market. The company operates under the BEV Global Leaders programme and is the only participant in that initiative. Since Tesla does not plan local assembly operations, it remains unclear whether the latest regulations will apply in the same manner as they do to franchise AP holders.

Market implications

Existing stock and vehicles already in transit are exempt from the new regulations and may continue to be sold at current prices. However, brands heavily dependent on CBU imports may face supply challenges until CKD operations are established.

The short implementation timeline may also create operational difficulties for manufacturers and distributors. Establishing local assembly operations requires investment, manufacturing capacity, quality control processes, and supplier coordination. For consumers, the immediate effects are expected to include fewer available EV models, higher vehicle prices, and potentially longer waiting periods for new launches while manufacturers prepare CKD operations.

Potential beneficiaries and affected parties

Potential beneficiaries

- Proton: The company's eMas models may face reduced competition in the affected price segments.
- Premium EV brands: Brands already positioned above MYR 300,000 may experience a smaller relative pricing impact.

Potentially affected brands

- BYD: Much of its current line-up may become either ineligible under the power requirements or significantly more expensive.
- Zeekr: The transition period before CKD production begins could affect sales continuity.
- Tesla: The impact remains uncertain due to its BEV Global Leaders programme status.
- Toyota: Several recently introduced EVs may become commercially less viable under the revised framework.
- New entrants: Brands such as Changan, Hongqi, and Arcfox may face challenges entering the Malaysian market with CBU models under the new thresholds.

Consumers

Consumers are likely to be presented with fewer EV choices within the MYR 100,000 to MYR 300,000 range, alongside higher pricing across much of the imported EV market.

The policy direction reflects MITI's focus on supporting local automotive investment and domestic industrial development. However, repeated regulatory revisions and changing requirements may also affect perceptions of policy stability among international automotive manufacturers considering investment in Malaysia.