KUALA LUMPUR, El Sky News – The Malaysian automotive industry has officially entered a new era this January as the government concludes the full tax exemption for Completely Built-Up (CBU) electric vehicles. While this policy shift marks the end of the “tax holiday” for imported EVs, it is balanced by the nationwide implementation of a revised, highly affordable road tax structure designed to sustain long-term adoption.
Local Assembly Becomes the New Standard
For the past few years, imported EVs enjoyed a zero-duty privilege that helped seed the market. As of January 1, 2026, these vehicles are once again subject to import and excise duties unless they are locally assembled (CKD).
This transition has already triggered a wave of localization. National carmaker Proton has taken a leading role with the official launch of the locally assembled Proton e.MAS 7, priced competitively starting from RM99,800 (inclusive of launch rebates). By moving to CKD operations, manufacturers can continue to offer tax-free benefits to consumers until the end of 2027, effectively shielding buyers from the price hikes affecting imported models.
Affordable Road Tax to Offset Costs
To mitigate the impact of expiring CBU incentives, the Ministry of Transport has introduced a kilowatt-based (kW) road tax system that is significantly cheaper than the previous combustion-engine formula.
Under this new 2026 structure, the annual cost for most mass-market EVs is remarkably low:
- Entry-level EVs (70kW – 100kW): Owners will pay between RM40 to RM70 per year.
- Mid-range SUVs (150kW – 160kW): Popular models like the BYD Atto 3 or Proton e.MAS 7 now incur an annual fee of approximately RM160 to RM200.
- High-Performance Models: Even luxury EVs see a drastic reduction; for instance, a Tesla Model 3 Performance that would have cost over RM2,500 under the old system now pays roughly RM600 to RM900.
Market Outlook
Industry analysts suggest that while the end of CBU exemptions might cause a temporary price adjustment for premium imported brands, the push toward local assembly will ultimately make EVs more accessible to the Malaysian public. “The focus has shifted from mere adoption to industrialization,” says an industry expert. “By incentivizing CKD units, Malaysia is positioning itself as a regional hub for EV manufacturing.”
As the infrastructure for charging stations continues to expand across the North-South Expressway and East Coast corridors, 2026 is poised to be the year where electric mobility moves from a niche luxury to a mainstream choice for Malaysian households.
