Part of an ongoing article series on renewable energy / climate crisis in Southeast Asia.
Introduction
Malaysia recently saw the rationalization of diesel subsidy, where the previously subsidized diesel at approximately RM2.15 per liter was increased to reflect closer to the market rate of RM3.00 per liter, a nearly 40% increase.
Citing the smuggling of subsidized fuel across borders as the main rationale for this reform, this move is direly important for Malaysia, as the government has been spending billions annually on diesel subsidies to keep prices low for local consumers.
Although the price increase may directly or indirectly impact consumers, particularly the low-income groups categorized as the economically vulnerable bottom 40 (B40) demographic, the government plans to implement targeted assistance programs for mitigation, acclimating consumers and businesses to the new pricing structure.
Higher diesel prices – and soon also petrol prices – are expected to create a more favorable economic environment for electric vehicles (EVs) by making fossil fuel comparatively expensive. The price shift is intended to incentivize consumers and businesses to consider EVs as a viable alternative.
As Malaysia prepares to chair ASEAN next year, it is crucial for the country to demonstrate its leadership by advancing the newly formulated National Energy Transition Roadmap (NETR) and the New Industrial Master Plan 2030 initiatives. These efforts are aimed at fostering a sustainable and low-carbon energy future, which includes expanding the ecosystem necessary for EVs to thrive.
This imperative is underscored by the fact that road transport in Malaysia is a significant contributor to carbon emissions, accounting for approximately 55 million metric tons of carbon dioxide equivalent, representing 85% of the emissions from the transport sector.
Addressing this challenge through the promotion of EVs represents a more manageable initial strategy compared to tackling emissions from heavy land vehicles, the aviation fleet and maritime transport.
In parallel, there were recent adjustments to electricity pricing. Earlier this year, domestic consumers using between 601 kWH and 1,500 kWh of electricity per month became ineligible for the RM0.02 per kWh rebate previously available under the government’s Imbalance Cost Pass-Through (ICPT) mechanism.
This change, implemented by the national electricity provider Tenaga Nasional Berhad, is projected to impact approximately 1.2 million households. These households, which consume electricity beyond 600 kWh, are expected to see an increase in their monthly electricity bills ranging from 4.2% to 6%. As a result, these consumers should anticipate an additional monthly expense of between RM12 and RM32.
Given these developments, a critical question remains: are Malaysian consumers prepared to transition to EVs despite these financial and logistical challenges?
This question highlights the need for careful consideration of the broader impacts of policy adjustments and their role in facilitating the shift towards a more sustainable energy landscape.
Optimism in the EV market
Despite the aforementioned challenges, Malaysian consumers must consider not only the cost of fuel and electricity but also several other important factors related to EVs, including their initial purchase price and safety concerns.
The total cost of owning an EV encompasses various elements: the purchase price, maintenance, insurance and charging expenses. Entry-level EVs are typically priced between RM 99,000–200,000; mid-level EVs are RM 200,000–300,000. Meanwhile, high-end EVs are priced between RM 300,000–600,000 or more.
Collectively, these represent a significant financial commitment. While the global automotive industry’s shift towards electrification promises reduced running and maintenance costs, this potential benefit is often overshadowed by the high upfront costs associated with purchasing an EV and the future expense of battery replacements.
Safety concerns also play a crucial role, particularly regarding the large batteries used in EVs. On Malaysian expressways, where speed limit violations are among the highest in the region, the risk of high-impact collision raises significant concerns about costly insurance claims and battery replacements.
On a positive note, EVs offer considerable advantages in terms of engine maintenance. They eliminate the need for regular oil changes, spark plug replacements and timing belt adjustments, which simplifies maintenance procedures and reduces overall costs.
Although battery replacement is required eventually, it typically occurs only after several years of use, thus reducing the frequency of such expenses.
Generally, it has been reported that premium EV brands often retain higher resale values compared to their competitors. However, recent price wars have disrupted this trend, leading to a decrease in the resale value of EVs compared to conventional internal combustion engine (ICE) vehicles.
This situation is expected to change over time, as increases in government incentives, advancements in battery technology and a growing demand for environmentally friendly transportation are likely to contribute to improved resale values for EVs in the future.
Advantages of EVs
Until December 2025, EV owners in Malaysia will enjoy free road tax as part of the government initiatives to support electrification. This is expected to prolong for a few years before a new tax structure for EVs is introduced, deemed to be more favorable than the conventional ICE vehicles.
It is likely that a period of 10 to 20 years is needed before the charging infrastructure can pose no issue to Malaysian consumers. Currently, consumers are still facing an inadequate number of charging stations to charge their vehicles. In the meantime, the government will continue building the ecosystem for sustainable transportation.
Environmentally, EV manufacturers claimed zero tailpipe emissions and reduced greenhouse gas emissions, which are aligned with the SDGs. However, from the standpoint of environmental impact, EV production currently generates twice the carbon dioxide (CO2) emissions compared to conventional ICE vehicles.
This is primarily due to the production of battery cells for EVs, which heavily depends on the extraction of lithium, a process that has been subject to considerable controversy. It is important to note that lithium is being actively mined on a large scale globally, particularly in South America, within a region known as the “Lithium Triangle”, encompassing Chile, Bolivia and Argentina.
This vast area of salt flats contains over 75% of the world’s lithium reserves and is among the driest regions on Earth. The arid conditions present significant challenges for lithium mining, as water must be pumped to higher elevations to enable efficient extraction, as seen in the Salar de Uyuni region.
Furthermore, the production of batteries for EVs also requires other metallic minerals such as cobalt and nickel. In mining regions worldwide, environmental concerns – including water pollution and socio-economic issues, such as social justice and child labor – continue to cast a shadow over the EV industry, despite its reputation as a sustainable mode of transportation.
However, at the operational level, EVs emit substantially lower CO2 levels compared to conventional ICE vehicles. According to studies that assume an average vehicle lifespan of nine years, conventional vehicles emit up to three times more CO2 than EVs.
This conclusion has been reached even when accounting for the fact that EVs are often charged using electricity generated from a source that is 70% fossil fuels, as is the case in many countries. This analysis does not yet include emissions of pollutants such as sulfur dioxide (SO₂) and nitrogen oxides (NOx) from conventional vehicles.
Notably, the carbon emissions of EVs also depend on the location where they are used. For instance, an EV driven and charged in Freiburg, Germany, where the majority of electricity is generated from clean renewable energy sources such as solar, wind and biomass, is undoubtedly “greener” than an EV operated in Kuala Lumpur.
Summary
In pursuit of progress and the promised green revolution, authorities and stakeholders involved – such as the Malaysian Ministry of International Trade and Industry (MITI), EV manufacturers and local authorities – must also address the various challenges that accompany the rise of EVs.
These challenges include: 1) ensuring cybersecurity to prevent the manipulation of EV user location data or vehicle control; 2) maintaining grid stability; 3) developing a robust recycling ecosystem for EV batteries; 4) ensuring access to and standardization of legitimate charging stations; 5) regulating charging fees, and; 6) considering public subsidies for owning EVs.
Overall, if the EV ecosystem receives sustainable support, it can significantly contribute to the success of the NETR, particularly by capitalizing on economic opportunities in the battery recycling sector. This includes the separation of plastic components, valuable metals as well as the “black mass” mixture of lithium, cobalt and nickel, which can be fully leveraged for technology transfer and the creation of green jobs for Malaysians.
