Developments in Southeast Asia's electric vehicle manufacturing sector have shifted, with attention focused on Malaysia following BYD Malaysia's confirmation last August of plans to establish a local assembly plant in Tanjong Malim, Perak, which was expected to commence production in the second half of 2026.

However, no update has been provided regarding the facility's progress, and the reason has now been clarified. According to a local daily, the status of the plant, which was intended to be fully funded by BYD, remains uncertain, as the company is reassessing its production plans in the country due to reported disagreements with the Ministry of Investment, Trade and Industry over specific requirements.

The report indicates that the key point of contention relates to conditions set by the Ministry of Investment, Trade and Industry, which would require BYD to export up to 80% of the vehicles produced in Tanjong Malim, while the remaining 20% would need to consist of vehicles priced above MYR 200,000 per unit.

"These [the 80% export figure and 20% production of EVs at above MYR 200,000, or around US$ 49,800, for the local market] were the terms they could not agree on," said Johari Abdul Ghani in a brief phone conversation with a local daily.

He added that there is a need to protect the local automotive industry, which provides employment to approximately 700,000 people. "You must also remember that both Proton and Perodua have 50% local content in their cars, and Proton sells about 150,000 cars a year, while Perodua sells about 350,000. These two companies have built much of the existing ecosystem for the automotive industry in Malaysia, so they must be protected," he said.

When asked whether Chery Malaysia's plans for a MYR 2.2 billion investment in its Smart Auto Industrial Park assembly plant in Hulu Selangor would proceed, the minister stated that the agreement had already been concluded and remained in place. The report added that it is not known how this will affect other Chinese carmakers such as Zeekr and XPeng, which are understood to have plans to commence local assembly activities for EVs in 2026, following the end of the tax exemption on completely built-up (CBU) EVs at the end of 2025.

The government has also introduced a minimum price of MYR 250,000 for fully imported CBU EVs, covering both new brands and new models from existing brands, contributing to a shift towards completely knocked down (CKD) operations. This creates a MYR 50,000 difference between the reported MYR 200,000 minimum for CKD EVs and the minimum for CBU electric vehicles.