Malaysia Forgoes RM3.3 Billion in EV Tax Revenue Amid Charging Infrastructure Shortfalls

In a candid revelation during the Proton eMas 7 PHEV CKD line-off ceremony on Friday, Investment, Trade and Industry (MITI) Minister Datuk Seri Johari Abdul Ghani disclosed that the Malaysian government forfeited approximately RM3.3 billion in tax revenue over the past four years due to the fully-imported (CBU) electric vehicle (EV) tax exemption policy.

The tax holiday, which ran from 2022 to 2025, waived both import and excise duties for CBU EVs in a bid to accelerate the adoption of green mobility. While the initiative successfully spurred a surge in EV registrations, Minister Johari highlighted that the financial concession has not been matched by adequate infrastructure development, leaving many early adopters facing significant charging challenges.

The Infrastructure Gap: A Growing Pain Point

“For four years we let EVs be imported without charging import or excise duties. The country’s total forgone tax was RM3.3 billion,” Johari stated. “We forwent this for four years, but there are not enough public chargers to accommodate the increased EV volume.”

The minister pointed out specific structural hurdles that hinder the widespread installation of private chargers, particularly in high-density residential areas. Many older condominiums and apartments were not designed with the electrical load capacity to support mass EV charging.

“Some flats and condos don’t have chargers, and if residents want to install AC chargers, the Fire and Rescue Department (Bomba) will not approve it because, at the time the building was constructed, the power supply was deemed sufficient only for conventional needs,” he explained.

He illustrated the scale of the problem with a hypothetical scenario: “Let’s say a condo has 500 units and each unit owns two cars, that’s 1,000 vehicles. If everyone installs an AC charger, there wouldn’t be enough electricity to cope with the demand.” This bottleneck has left many urban EV owners reliant on an insufficient network of public charging stations, leading to range anxiety and inconvenience.

Learning from China’s Model

Minister Johari drew a sharp contrast between Malaysia’s approach and that of China, the world’s largest EV market. He recounted a recent meeting with China’s trade minister, who attributed the success of their EV industry not just to consumer incentives, but to massive state investment in infrastructure.

“I met China’s trade minister and asked him how EVs became so successful there. He said the Chinese government spent billions of dollars on public chargers. We, on the other hand, spent billions giving exemptions,” Johari noted.

This comparison underscores a strategic pivot in Malaysia’s policy. Rather than continuing to subsidize vehicle purchases through tax breaks, the government now intends to direct resources toward building the necessary backbone for EV adoption. Johari confirmed that taxes collected from CBU EVs since the start of 2026 would be ring-fenced and ploughed directly back into the development of public charging infrastructure.

Powering Up: Collaborations with TNB

To address the grid capacity issues, the ministry is engaging in high-level discussions with Tenaga Nasional Berhad (TNB), the national utility provider. The focus is on upgrading the electrical grid and building more substations to support the deployment of high-power public chargers.

“We’re not prohibiting EVs. EVs are the future. Hybrids are the future,” Johari assured. “But let’s not be early movers in the market only to create problems for the rakyat; ultimately, the government will also have to face these problems.”

The goal is to ensure that infrastructure growth keeps pace with vehicle sales, preventing the kind of logistical bottlenecks currently plaguing some urban communities. By strengthening the grid and increasing substation capacity, the government aims to facilitate both public charging networks and the eventual approval of private charger installations in older buildings.

The Road to 30,000 Chargers

The government has set an ambitious target of installing 30,000 public charging points by 2030. However, current progress indicates that the nation is still playing catch-up. According to recent data, Malaysia has only achieved 21% of its interim milestones toward this goal.

With the end of the tax holiday and the reintroduction of duties on CBU EVs, the market is expected to shift further toward locally assembled (CKD) models, such as the newly launched Proton eMas 7 PHEV. This transition aligns with the national automotive roadmap, which prioritizes local manufacturing and value creation while simultaneously addressing the infrastructure deficit.

As Malaysia moves into this new phase of its EV journey, the focus is no longer just on getting cars on the road, but on ensuring that the roads and the grids that power them are ready to support them. The RM3.3 billion lesson serves as a stark reminder that technology adoption requires more than just financial incentives; it demands a holistic ecosystem built on reliability, accessibility, and foresight.