Preface:

Given the increasingly fierce competition in the domestic automobile market and the acceleration of the integration of the global automobile industry chain, many Chinese automakers and their component suppliers are actively exploring overseas markets to seek new growth points. Malaysia, as one of them, has also become an important target market for them to pursue new opportunities.

Author | Fang Wensan

Image Source | Network

Malaysia Is Becoming a "Safe Haven" for New Energy Vehicle Enterprises

From a policy perspective, Malaysia and its ASEAN market are gradually evolving into a stable "safe haven" for Chinese enterprises to expand overseas.

Chinese enterprises urgently need to enhance their international operational capabilities to consolidate and enhance their position in the global market.

However, some western "decoupling" and "chain-breaking" strategies have posed certain challenges to the reorganization of the industrial and supply chains of Chinese enterprises.

According to statistics from the General Administration of Customs, China's automobile exports have risen to 5.221 million vehicles in 2023, a significant year-on-year increase of 57.4%, surpassing Japan and becoming the world's largest automobile exporter.

However, behind this achievement, China's automobile exports have also frequently encountered tariff barriers from regions such as the United States and the European Union.

Therefore, turning their attention to Malaysia and other ASEAN countries for industrial layout has become a rational choice to respond to the current trade environment.

Malaysia, as the geographic center of ASEAN, has established diplomatic relations with China since the inception of ASEAN. This year marks the 50th anniversary of the establishment of diplomatic relations between China and Malaysia, and it is also the "Year of China-Malaysia Friendship".

For a long time, China has been Malaysia's largest trading partner, maintaining this position for 15 consecutive years.

Malaysia Has Begun to Actively Promote Electric Vehicles in Recent Years

The Malaysian government has set clear development goals for electric vehicles, expecting that by 2030, the sales of electric vehicles will account for 15% of the total market sales, and by 2040, this proportion will further increase to 38%.

To achieve these goals, the Malaysian government has implemented tax reduction policies for foreign electric vehicle manufacturers and exempted import tariffs on electric vehicles and related components, as well as sales taxes on electric vehicles.

The Malaysian government's annual fiscal expenditure is about 400 billion ringgit, and nationwide fuel subsidies, including diesel and gasoline, amount to 80 billion ringgit.

It is expected that by promoting electric vehicles, the subsidy can be reduced from 80 billion ringgit to 60 billion ringgit, which will be a significant achievement. Therefore, Malaysia holds a positive attitude towards promoting electric vehicles.

According to data released by the Malaysian Automotive Association, the country's passenger car sales reached 719,000 vehicles in 2023, a year-on-year increase of 12%. The new energy vehicle market also showed a positive growth trend, with a combined sales of 38,000 pure electric and hybrid vehicles.

Among new energy vehicles, the sales of pure electric vehicles are particularly prominent, reaching about 10,000 vehicles, a significant increase compared to 2,631 vehicles in 2022.

To further promote the development of new energy vehicles, Malaysia has introduced various tax reduction policies, which have attracted many Chinese automotive industry upstream and downstream enterprises to invest in the Malaysian market.

Using This Bridgehead to Radiate the Entire ASEAN Market

In the process of entering markets such as Malaysia, Indonesia, and Thailand, Chinese brands are not merely targeting a single market but aim to further radiate the entire ASEAN market and even the global market through the bridgehead status of these markets.

Currently, Chinese automakers are gradually opening the doors to the ASEAN market with the help of "new four modernizations" vehicles. Brand competition in the domestic market has expanded to the ASEAN market, especially with more intense competition against Japanese brands.

The structure of the Southeast Asian automobile market is undergoing significant changes, and the market share of Chinese automobile brands has increased significantly from less than 1% five years ago to nearly 7% in 2023.

Although the current scale of the Southeast Asian new energy vehicle market is still small, its growth potential cannot be ignored.

Against the backdrop of global emission reduction, governments in Southeast Asian countries have set electric vehicle development goals and adopted incentives to promote the development of electric vehicles.

Specifically, Thailand aims to increase its electric vehicle production to 30% of total vehicle production by 2030;

Malaysia plans to increase the proportion of electric vehicle sales to 15% by 2030 and further increase it to 38% by 2040;

Indonesia has set a target of achieving a 25% share of electric vehicle sales by 2030.

According to a report released by KPMG, the Southeast Asian new energy vehicle market is expected to grow significantly from 38,000 vehicles in 2020 to 1 million vehicles in 2030.

According to forecasts from Gaishi Research Institute, the overall sales in the Southeast Asian market are expected to approach 4.5 million vehicles by 2030, of which pure electric vehicle sales are expected to be around 1.25 million, accounting for nearly 30% of the market share.

The Domestic New Energy Industry Chain Will Be Fully Deployed Here

According to statistics from Gaishi Research Institute, many automakers such as SAIC, Great Wall, BYD, Geely, Chery, Nezha, Changan, GAC, and Dongfeng have already made layouts in the Southeast Asian market.

According to First Financial News, public data shows that among Chinese independent brands in the Malaysian market, Chery performed the most outstandingly, with annual sales reaching 4,493 vehicles, ranking first; BYD followed closely, with annual sales of 3,728 vehicles.

From a market performance perspective, Malaysia's pure electric vehicle sales rankings from January to April this year show that BYD Atto 3 ranked second with 1,118 sales, second only to Tesla Model Y.

In addition, BYD's Dolphin and Seal models also ranked fourth and fifth, respectively.

In February this year, Chery Automobile confirmed in Malaysia that its new models, the OMODA 5 and Tiggo 8 Pro, will enter the local market in July and achieve "localization" production and procurement of some components.

In addition, in April this year, GAC Motor and Gorgeous Hill Tan Chong Automobile Co., Ltd. held a CKD plant completion and mass production ceremony at the Seberang Jaya factory in Malaysia, marking the successful implementation of GAC Group's first overseas CKD project, and the first model, the GS3, has also achieved mass production.

In early 2024, Nezha Automobile signed a cooperation agreement with Malaysian partners, planning to establish its third overseas factory in the country.

In May, AION Y Plus, a pure electric SUV under GAC AION, was launched in Malaysia.

It is expected that XPeng Motors will deliver the right-hand drive version of its pure electric SUV, the XPeng G6, to the Malaysian market in the third quarter.

In addition to vehicle manufacturers, automotive supply chain companies such as EVE Energy are also actively taking action.

It is reported that EVE Energy is building a production base in Malaysia, with the first phase of the project focusing on the production of cylindrical batteries, and the second phase expanding into the energy storage field.

The overall industrial layout not only covers vehicle and supply chain component manufacturing capabilities but will also attract high-quality enterprises from industries such as steel, rubber, semiconductors, and electronic manufacturing and processing, new energy vehicle batteries, industrial internet, digital and digitization, photovoltaics, and energy storage to jointly expand the global market.

Conclusion:

As a crucial link in the global chip supply chain, Malaysia is actively seeking greater breakthroughs and development in the field of new energy vehicles.

From a certain perspective, the deepened cooperation between Malaysia and Chinese automakers in the new energy vehicle industry is not a one-sided dependence or tilt but a "win-win" strategy reached after in-depth consideration at both the business and national levels.

Partial references: Economic Observer: "Geely's Business in Malaysia", First Financial News: "Chinese Automobiles 'Invade' the Japanese Auto Market", Auto Prophet: "From 'Internal Competition' to 'External Competition', Automakers Head to Malaysia", China Automobile News: "Malaysia, the Next Stop for Chinese Automakers Going Abroad", LHC Consultancy: "Reshaping the Competitive Landscape in the Southeast Asian Automobile Market: How Chinese Automakers Are Seizing the Beachhead in the Malaysian Automobile Market?", Gaishi Auto Daily Express: "Going Abroad to Southeast Asia? Geely Finds a Breakthrough in Malaysia"