Malaysia Electric Vehicle Market: Industry Analysis and Forecast (2022-2029)

Malaysia Electric Vehicle Market Set for Strong Expansion, Expected to Reach USD 39.76 Mn by 2029 at a CAGR of 12.46%

Kuala Lumpur, Malaysia - The Malaysia Electric Vehicle (EV) Market is witnessing a gradual but promising transformation, driven by supportive government policies, rising environmental awareness, and increasing investments in sustainable mobility solutions. According to the latest market research analysis, the Malaysia Electric Vehicle Market was valued at USD 15.54 million in 2021 and is projected to grow at a compound annual growth rate (CAGR) of 12.46% during the forecast period from 2022 to 2029, reaching nearly USD 39.76 million by 2029.

This growth reflects Malaysia's strategic push toward low-carbon transportation and its ambition to position itself as a regional hub for energy-efficient and electric vehicles within Southeast Asia.

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Malaysia Electric Vehicle Market Overview
Malaysia is steadily emerging as a modern, competitive market economy, supported by strong macroeconomic fundamentals and progressive industrial policies. Between 2021 and 2023, Malaysia recorded an average annual GDP growth rate of approximately 7.2%, ranking among the fastest-growing economies globally. Traditionally recognized as a leading producer of tin and rubber, the country is now expanding its focus toward advanced manufacturing and green technologies.

In alignment with global sustainability goals, Malaysia has introduced several initiatives to promote electric mobility. According to the Economic Research Institute for ASEAN and East Asia (ERIA), the Malaysian government launched the National Green Technology Policy to support EV adoption and reduce carbon emissions. Additionally, the Genentech Malaysia Plan outlined ambitious targets, aiming to have 100,000 electric passenger vehicles, 2,000 electric buses, and 100,000 electric motorcycles or scooters operating on Malaysian roads.

These initiatives underscore the government's long-term commitment to clean transportation and serve as a strong foundation for the future growth of the electric vehicle market.

Market Dynamics
The Malaysia Electric Vehicle Market is currently in its early stages of development, characterized by low adoption rates but significant long-term potential. Government policies such as the National Transport Policy emphasize low-carbon mobility programs and fuel-efficient transportation systems, encouraging both consumers and manufacturers to explore electric alternatives.

However, market growth faces several structural challenges. Limited public awareness of EV benefits, high upfront costs, and underdeveloped charging infrastructure continue to restrain widespread adoption. As of the end of 2021, electric vehicle sales in Malaysia remained extremely low, with only a handful of EVs sold nationwide.

Despite these limitations, momentum is gradually building. Local automotive manufacturers and technology firms have started investing in EV research and development. Proton's unveiling of the Proton Iriz EV at the 2021 International Genentech and Eco Products Exhibition marked a significant milestone as Malaysia's first locally produced electric vehicle prototype. Other companies, including Perodua, are also exploring electric and hybrid vehicle development during the forecast period.

Key Drivers of Growth
Several key factors are expected to drive the growth of the Malaysia Electric Vehicle Market over the coming years:

Government Policy Support: The National Automotive Policy (NAP) emphasizes Energy Efficient Vehicles (EEVs) and aims to make Malaysia a regional center for sustainable automotive manufacturing. Financial grants, R&D incentives, and training programs support industry development.

Environmental Concerns: Conventional vehicles powered by fossil fuels contribute significantly to greenhouse gas emissions. Electric vehicles present a cleaner alternative, particularly when powered by renewable energy sources.

Abundant Biomass Resources: Malaysia's extensive oil palm industry offers a unique opportunity to generate green electricity. With over 454 palm oil mills processing more than 112 million tonnes of fresh fruit bunches annually, surplus biomass could be converted into renewable electricity to power EVs. This approach could reduce CO2 emissions by up to 0.9 tonnes per EV per year by 2029.

Private Sector Participation: Companies such as Oyika are introducing innovative solutions like battery-swap systems for electric motorcycles, while MGTC is actively expanding EV charging infrastructure across Malaysia.

Roadblocks to EV Adoption in Malaysia
Despite favorable long-term prospects, Malaysia faces several obstacles in accelerating EV adoption:

Continued Focus on Internal Combustion Engines: Malaysia's automotive industry remains heavily invested in petrol-powered vehicles. Meanwhile, regional competitors such as Indonesia have attracted major EV investments from companies like Hyundai and Toyota.

Lack of Consumer Subsidies: The absence of purchase incentives or tax reductions makes EVs financially inaccessible for most Malaysians. High-end models such as Tesla's Model S remain out of reach for the M40 income group, while more affordable options still lack strong government support.

Limited Charging Infrastructure: Insufficient charging stations and concerns about vehicle maintenance costs discourage potential buyers from switching to electric vehicles.

Malaysia Electric Vehicle Market Segment Analysis
The Malaysia Electric Vehicle Market is segmented by vehicle type and electric vehicle technology.

By vehicle type, the market includes two-wheelers, passenger vehicles, and commercial vehicles. Passenger vehicles dominated the market in 2021, driven by urban mobility needs and growing interest in private EV ownership.

By electric vehicle technology, the market is segmented into Battery Electric Vehicles (BEVs), Plug-in Hybrid Electric Vehicles (PHEVs), and Hybrid Electric Vehicles (HEVs). Hybrid vehicles currently account for a larger share due to their lower dependency on charging infrastructure.

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Regional Analysis
Within the broader Asia Pacific region, Malaysia holds a modest but growing share of the electric vehicle market. Asia Pacific accounted for the largest regional share in 2021, driven by strong EV adoption in countries such as China, Japan, and South Korea. Malaysia is expected to benefit from regional technology transfer, supply chain integration, and policy alignment over the forecast period.

Opportunities in the Malaysia Electric Vehicle Market
The market presents significant opportunities for investors, manufacturers, and technology providers. Expanding charging infrastructure, developing affordable EV models, leveraging renewable energy sources, and focusing on EV components such as lithium-ion batteries could accelerate market growth. Malaysia's existing strength in automotive components manufacturing positions it well to become a key supplier within the regional EV ecosystem.

Future Outlook
Looking ahead, the Malaysia Electric Vehicle Market is expected to transition from an early-stage market to a more structured and competitive ecosystem by 2029. Continued policy support, increased consumer awareness, and infrastructure development will be critical to sustaining growth. With a projected market size of USD 39.76 million by 2029, Malaysia is poised to play an increasingly important role in Southeast Asia's electric mobility landscape.

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