CIMB: EV Demand Will Be Resilient Despite End of Tax Holiday

Electric vehicle (EV) demand in Malaysia is expected to remain resilient despite the expiry of tax incentives, as front-loaded inventories and a delay in open market value (OMV) revisions are set to cushion total industry volume (TIV) in the first half of 2026 (1H 2026), said CIMB Securities Sdn Bhd.

In a research note today, the firm said these factors should help keep EV prices stable after the end of the completely built-up (CBU) tax exemption, while supporting demand for non-national brands.

The automotive industry is adjusting in 2026 following the expiry of the 100% import and excise duty exemption for CBU EVs, which had been in place since 2022.

Despite this, prices for several popular EV models remain unchanged. These include the BYD Atto 3, BYD Sealion and Xpeng G6, while Tesla Malaysia has confirmed that prices for the Model 3 and Model Y will remain at 2025 levels.

CIMB Securities said this reflects inventories brought in ahead of the Dec 28, 2025 tax holiday deadline. Channel checks indicate that major players such as BYD, Xpeng and Proton e.MAS have secured enough stock to meet demand over the next three to six months, ahead of a shift to local assembly.

However, some brands may still face price adjustments during this transition period, particularly where gaps exist in locally assembled model availability.

Separately, the Finance Ministry has informed the Malaysian Automotive Association that revisions to the OMV calculation methodology will be deferred by six months to July 2026.

CIMB Securities views this as near-term relief, especially for automakers with greater exposure to locally assembled vehicles, including Toyota, Honda, Mazda, Chery, BMW and Mercedes-Benz.

At the company level, Proton posted year-on-year sales growth of 3.3% to 157,976 units in 2025, its highest since 2011, driven mainly by EV sales following the launch of the Proton e.MAS 7 in December 2024, alongside a 26% rise in exports to 6,000 units.

EVs accounted for 5.6% of Proton’s total sales, or 8,890 units, with the e.MAS 7 contributing 8,018 units and emerging as Malaysia’s best-selling EV model.

CIMB Securities expects Proton to sustain momentum in 2026, supported by the launch of the Proton Saga MC3 and Proton e.MAS 5, which have received bookings exceeding 30,000 units and 14,600 units respectively. 

The carmaker is also expected to benefit from Budget 2026 measures, including a matching grant of up to RM2,000 for the voluntary scrapping of unroadworthy vehicles aged 15 years and above.

CIMB Securities maintained a ‘neutral’ rating on the automotive sector, citing subdued growth amid intensifying competition.

Source: Bernama