*This content was translated by AI.
Last month, Tesla and BYD sold 11,119 units and 4,652 units, respectively. Hyundai Motor sold 23,012 units during the same period. Amid complaints that subsidies were benefiting only foreign companies, the Malaysian government has drawn attention by shifting to an unconventional approach. The Malaysian government has significantly strengthened import restrictions on fully built-up (CBU) electric vehicles. As a result, market entry barriers for Chinese EV manufacturers, including BYD, have risen in the local market. This measure was led by Malaysia's Ministry of Trade, Industry and Energy (MITI).
The new import regulations officially took effect on July 1, 2026. To be imported into the country, electric vehicles must simultaneously meet two mandatory requirements. First, the price including freight and insurance (CIF) must be at least 200,000 ringgit (approximately 755 million won). Second, the maximum output of the electric motor must be at least 180kW (approximately 241 horsepower). With additional taxes and operating costs, the final retail price will become even higher.
This policy has dealt a direct blow to Chinese brands that had been expanding their market share by promoting low-priced models. According to data from Malaysia's Road Transport Department (JPJ), Chinese brands accounted for about 60% of Malaysia's new energy vehicle market as of the end of 2025. However, under the new regulations, further imports of previously popular models are no longer possible. All seven models currently sold by BYD have starting prices below 200,000 ringgit. The Dolphin and entry-level Atto 3 do not even meet the 180kW output requirement. Models such as the Zeekr 7X and Chery Omoda E5 also fail to satisfy import requirements.
Local production efforts by Chinese companies aimed at circumventing regulations have also become difficult. This is because the Malaysian government has imposed stringent conditions on new manufacturing projects approved after September 1, 2025. New projects must ensure a minimum vehicle price of 100,000 ringgit. Additionally, at least 80% of production must be exported by law, with local sales limited to 20%. Welding, painting, and final assembly processes must also be completed locally. As a result, BYD's planned assembly plant construction in Tanjung Malim, Perak, has been halted. BYD already has bases in Thailand and Indonesia, making it difficult to meet the 80th% export requirement, analysts say.
On the other hand, some Chinese companies are seeking breakthroughs by leveraging existing local infrastructure. Lipo Motor began local assembly of its C10 model from June 2026 using Stellantis' existing factory. Xpeng also announced production plans for its G6 model in collaboration with a local manufacturer, EPMB. Since these projects utilize existing facilities rather than new ones, they are not subject to the mandatory 80% export regulation. The Malaysian government maintains that this policy is aimed at attracting high-quality investments and developing the local supply chain.
Meanwhile, unlike Malaysia, South Korea has signed free trade agreements (FTAs) with many major countries and economic blocs worldwide and must comply with the World Trade Organization's (WTO) national treatment principle. Therefore, we cannot take similar measures due to concerns over potential trade disputes.
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*This content was translated by AI.
