Fuel subsidy policy hampers Malaysia's EV adoption push, says Gentari deputy CEO – paultan.org

The push to drive electric vehicle (EV) adoption forward in Malaysia may be picking up momentum, but more can be done to ensure that it expands beyond that currently, the going-green camp points out. One of the key elements stumping EV take-up is that of the price of fuel – as long as it remains cheap, consumers are likely to stick with internal combustion engine (ICE) options instead of making the switch.

That’s the viewpoint of Gentari deputy CEO and chief green mobility officer Shah Yang Razalli, who said that the country’s fuel subsidy policy hampers its directional steer towards more EV use, as The Edge reports.

He said that while the import tax and excise duty exemption on completely built-up (CBU) EVs provided by the government was a positive move, Malaysia’s ongoing fuel subsidy is contradictory to its EV push, resulting in EVs being 20% more expensive to own and operate than ICE equivalents here.

โ€œWhen we look at the fundamental driver of EV adoption, we canโ€™t help but talk about total cost of ownership parity or TCO parity. In simple terms, is it cheaper to buy and operate an EV throughout its lifetime compared to an equivalent ICE (internal combustion engine) vehicle?โ€ he said at the Energy Transition Conference in Kuala Lumpur yesterday.

He said that what reduces the EV-to-ICE cost parity are not just financial incentives in the form of outright purchase subsidies as well as additional incentives such as free public charging, parking or tolls, but also through disincentivising the use of hydrocarbon-based fuels through the introduction of fuel taxes or carbon taxes.

โ€œThe parity that we see [in Norway] is [EVs are] about 30% [cheaper than ICE equivalents]. For countries with good sustainable EV adoption, we see about 20% to 30% [parity in favour of EVs] to be the right amount,โ€ he noted.

Looking at regional examples of countries that have attained price parity, Shah said beyond tax exemptions, these countries also offered subsidies in terms of reducing the outright purchase price of EVs, as well as disincentivising the use of fuel for ICE vehicles.

โ€œNote that none of these countries, like India and Thailand, had fuel subsidies to begin with. But they have instituted some sort of duty or tax or, in some cases, carbon tax on the use of fuel for ICE,โ€ he said.

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