Many people have the idea that electric cars are irrelevant for now in Malaysia. I think they’ll be more open to them within five years.
That an EV is expensive was true 10 years ago when an enterprising young man from South Africa, Elon Musk, went to the US to seek his fortunes and went on to build the first modern electric car, the Tesla roadster, which is priced in the bracket of luxury cars.
But China has changed the equation. Its automotive industry has started designing and making EVs for its domestic market at prices from 100,000 yuan or RM50,000.
There was a huge variety of domestic makers and EV models at the Guangzhou Auto Show which began last Friday (Nov 19). The brand names will bewilder most foreigners.
Even so, there were brands like BYD, XPeng (pronounced siao peng) and Nio which would resonate with auto industry observers because as with Tesla, these makers with international ambitions are turning the traditional car industry on its head.
The growth in China’s EV industry is because of the Chinese government’s anti-air pollution policy which has seen clean air and blue skies return to its capital, Beijing, within three years.
The pro-environment policy includes subsidies for buyers of affordable EVs, the right to own a car if it’s an EV, and the right to enter Beijing’s ring roads if it’s a zero-emission car, among other non-tax initiatives.
An essential element of the Electric Vehicle industry that Malaysians must consider intensely is that the EV is beyond the bounds of mere manufacturing.
One of the key points is the price of Tesla stock. Its valuation as a corporation is higher than those of Toyota or Volkswagen, the world’s top two carmakers in terms of number of cars sold.
Tesla is so highly valued because investors consider it as a tech stock. The EV of the future is the technology of autonomous mobility.
Another indicator to the EV as a disruptor was revealed at the Los Angeles Auto Show.
Vietnam, which was not even a speck in the Southeast Asian auto industry 10 years ago, displayed two EVs made by Vinfast, a subsidiary of Vietnam’s richest conglomerate, property developer Vingroup.
The presence of China and Vietnam manufacturers is a good indicator that the EV represents a new age industrial enterprise where emerging economies such as China, India and Vietnam can challenge legacy car makers who are handicapped by investments and human resources sunk into the internal combustion engines.
How can Malaysia take advantage of this new age industry that combines hardware, software and 5G+ telecommunications?
Our government finally accorded 2+3 year tax incentives for EVs in the 2022 Budget proposal.
The next step is to introduce a 10-year policy to promote the assembly and manufacturing of EVs. A long-term policy is needed in the context that it takes a carmaker about three years to plan a local assembly operation. An all-new entrepreneur can do it even faster if not burdened by legacy issues as proven in Vietnam.
A long-term policy that is transparent and menu-driven rather than “customised incentives” will attract hot interest from investors keen on a new marketplace.
It’s not as if Malaysia has no automotive talent, it’s just that the policies must be competitive with our neighbours in Southeast Asia.
About 20 Malaysians were successfully headhunted by the Vinfast group and even more would have been drawn by the attractive financial offer if not for family commitments and the disinclination to work and be marooned on a Vietnamese island during the pandemic. Many more are in Thailand, Indonesia and Japan’s automotive sector.
The way is clear for Malaysia to reap the investments in its automotive industry but it must resolve three issues:
Mandate DRB-Hicom, a government-linked corporation, to sell a majority stake to its JV partner, Zhejiang Geely Holdings, on condition that it makes Malaysia a regional manufacturing base.
Incentivise majority stakeholders such as Peugeot to make Malaysia their EV hubs for Southeast Asia. Peugeot owns an assembly plant in Kedah.
Phase out the climate-changing hydrocarbon subsidy as guided by the UNCOP26 and use the money to support workers and marginal communities directly such as by a basic income targeted for the B40.
We’ve seen the outcome of the Melaka elections and the people’s mandate for economic development and their thumbs down to religiosity and party hopping.
Keep an eye on South Korea and its presidential hopeful, Lee Jae-Myung, who’s campaigning on a platform of a Universal Basic Income. This is relevant for Malaysia because both economies display a huge disparity in income distribution.
Lee is promoting a five-year plan to give residents 500,000 won, or RM1,700, each month.
Universal basic income has been tried in Scandinavia and is rising in prominence in the US, with some cities implementing similar programmes.
The views expressed are those of the writer and do not necessarily reflect those of FMT.