Tesla a game-changer for Malaysia’s automotive sector
04 Mar 2023
Tesla’s entry into Malaysia’s market has been viewed as a game-changer for the automotive sector, with this development being a positive initial step in growing the local electric vehicle (EV) ecosystem.
Of note, the Ministry of International Trade and Industry (Miti) recently approved Tesla’s application to import battery electric vehicles (BEV) into Malaysia. Tesla is expected to establish a head office in Malaysia, including its experience centres, service centres as well as a network of Tesla superchargers.
“The latest development is a positive initial step in growing the local EV ecosystem, albeit positioned within a niche market,” MIDF Amanah Investment Bank Bhd’s research team (MIDF Research) commented in a report.
While too early to see the impact of this development, the research team see several potential benefits from Tesla’s entry.
The setup of a Tesla supercharger network could contribute to the Government’s target of establishing a total 10,000 charging points in Malaysia by 2025 under the Low Carbon Mobility Blueprint (LCMB) from the current 900 units.
It also pointed out that the establishment of Tesla aftersales service network and the various knowledge transfer, local contractor involvements and local workforce requirements could drive upskilling of the local labor force and corporates in preparation for the transition to BEVs.
“At this point, it is unclear if Tesla’s entry will eventually evolve into local assembly or local EV component sourcing, but this could provide a critical boost to the domestic auto supply chain should it materialise,” it added.
In the immediate term, the research team believe that automotive companies that are highly dependent on volumes from the more than RM200,000 price points (dominated by the luxury brands), are likely to be impacted, should there be any significant market share shift from Tesla’s entry.
“The luxury brands in Malaysia make up just 3.9 per cent of total industry volume (TIV) and is pretty much a niche market. The segment is dominated by two players; Mercedes (assembled by DRB-Hicom) and BMW (assembled and retailed by Sime Darby), followed distantly by Volvo, Mini, Lexus and Porsche.
“While key non-nationals such as UMW Toyota and Honda have exposure in the more than RM200,000 price points, these models contribute little to their respective total sales volumes.
“We also think the current grey importers, who in the past had been importing new and used Tesla models will be impacted by Tesla’s official entry,” it said.
With little volumes generated from these price points and from BEVs in general, it is difficult to imagine Tesla setting up multiple plants within a single region, at least in the immediate-term, it added.
“The biggest competition obviously, is coming from Indonesia which has the advantage of large nickel reserves and aggressive approach to attracting investments into battery cell manufacturing, as well as a significantly larger population and TIV.
“Malaysia on the other hand, boasts a robust E&E supply chain coupled with much higher per capita income which could drive relatively faster BEV adoption – high BEV cost currently is a stumbling block to BEV ownership in most Asean countries.
“Despite Malaysia’s relatively smaller population, it is currently the third largest auto market in the region,” MIDF Research said.
“Importantly, we believe growth in BEV adoption could eventually allow opportunities for rollback of sizeable fuel subsidies, provided the BEVs themselves are within financial reach of the masses.
“Currently however, BEVs largely cater for the T20 market and therefore rolling back blanket fuel subsidies could hurt the B40 and lower M40 group without much option for them to make the transition to BEVs, in our opinion,” it said.
All in, MIDF Research retained its ‘positive’ stance on the sector.
Source: Borneo Post