Made In Malaysia, But How Much Of An EV Is Actually Local?

An electric vehicle (EV) assembled in Malaysia isn't necessarily built with mostly Malaysian-made parts.

In fact, locally assembled EVs reportedly have a localisation rate of just 20% to 30%, compared with up to 70% for foreign-brand petrol and diesel vehicles, according to a March 2026 report by The Edge Malaysia.

As Chinese EV makers expand across Southeast Asia, a new South China Morning Post (SCMP) investigation raises concerns about whether Malaysian automotive suppliers are benefiting from the boom.

So, how much of a Malaysian-assembled EV is actually Malaysian?

Locally Assembled Doesn't Mean Locally Made

So, what exactly makes an EV 'Made in Malaysia'? A completely knocked-down (CKD) vehicle is assembled in Malaysia using parts that may be imported or sourced locally. Local content refers to the Malaysian value included in its production, although the calculation depends on the applicable framework.

How Much EV Content Is Actually Local?

Much of the gap comes down to battery packs and electric motors, which together account for more than half of an EV's total cost, according to The Edge. At the time of its report, neither was being manufactured or assembled locally for domestic EV production.

The takeaway: More EVs rolling off Malaysian assembly lines doesn't automatically mean more Malaysian-made components inside them.

Why Aren't More Malaysian Parts Being Used?

Malaysia already has an established automotive supplier network. However, the transition to EVs introduces new technical requirements and supply-chain relationships.

According to SCMP's November investigation, Chinese EV manufacturers expanding across Southeast Asia often arrive with existing component suppliers, making it harder for smaller local firms to secure contracts.

Interestingly, Malaysia already has relevant manufacturing expertise. The Edge highlighted battery-cell production by Samsung SDI, copper foil manufacturing by SK Nexilis and the country's established semiconductor industry.

However, much of this output serves export markets rather than locally assembled EVs. The opportunity is therefore not just to build new factories, but also to connect existing Malaysian manufacturers with domestic automotive production.

BYD's Inokom Partnership: Local Assembly, But What About Local Parts?

In October 2026, BYD signed a memorandum of understanding (MoU) with Sime Motors subsidiary Inokom Corporation for CKD assembly in Kulim, Kedah, moving away from its earlier Tanjung Malim factory plan.

As Carz previously reported, the arrangement gives BYD access to an established local assembly operation. However, it does not establish how much Malaysian-made content will go into the brand's future locally assembled EVs.

What Is Malaysia Doing To Close The EV Local Content Gap?

The Edge reported that Malaysia's new customised incentive mechanism (NCM) is intended to encourage deeper localisation, research and development, and stronger partnerships with Malaysian suppliers.

The Malaysian Investment Development Authority (MIDA) has also highlighted cost, quality and technology barriers, alongside concerns about pass-through localisation, where imported components undergo minimal local processing without meaningful value creation.

There are encouraging examples of supplier-development efforts. SCMP reported that a May 2025 initiative involving MIDA and Chery brought together local parts and technology suppliers, resulting in commercial agreements.

These efforts show that local participation can grow, although building a competitive EV supply chain requires sustained investment and cooperation.

Can Malaysian Auto Parts Suppliers Still Benefit From EVs?

Yes, but the opportunities may look different from conventional automotive manufacturing. Industry observers cited by SCMP identified several possible pathways.

For smaller businesses, access to training, financing and technical partnerships could determine how successfully they adapt to electrification.

The Bigger Question For Malaysia's EV Industry

Malaysia's EV assembly growth brings investment and manufacturing opportunities, but its long-term value will depend on how deeply local businesses participate in the supply chain.

The real question isn't just how many EVs Malaysia assembles, but how much Malaysian value goes into each one.