BYD Cancels Malaysia Factory Construction, Switches to Local Cooperation: The Strategic Trade-off Behind Export Requirements

【Auto Market Insider】BYD's factory construction plan in Malaysia has changed. According to reports, BYD has shelved the plan to build its own vehicle assembly plant in Malaysia and instead entered into "in-depth negotiations" with local partners to achieve local production goals. This decision was revealed by Jacob Ma, Managing Director of BYD Malaysia.

Previously, BYD announced in August 2025 that it planned to build an assembly plant in Tanjung Malim, Perak, Malaysia. Now, Ma clearly stated: "The Tanjung Malim plant will not proceed."

From Self-Build to Cooperation: A Strategic Shift

BYD's alternative is to cooperate with a "mature local enterprise".

Ma stated that this partner "has the capacity and capability to meet BYD's requirements and support a complete local assembly business", and discussions have "entered a very deep stage".

According to reports from May this year, this partner is likely Sime Motors, the official distributor of BYD in Malaysia. Cooperation might utilize a factory owned by a subsidiary of Sime Motors located in Kulim, Kedah, for contract assembly.

Shifting from "Self-Build Plant" to "Local Contract Manufacturing", BYD's logic is very pragmatic: not bearing the heavy assets of building a factory, yet quickly achieving local assembly, bypassing policy thresholds.

Why Give Up Self-Building? Policy Game is the Key

Why did BYD give up building its own factory? The answer lies in policy.

Malaysian financial media "The Edge" reported in March this year that BYD failed to reach an agreement with the Ministry of Investment, Trade and Industry of Malaysia on relevant conditions. One of the disputes involved the export quota requirement for locally assembled vehicles—the highest requirement may be to export 80% of locally assembled vehicles.

An 80% export requirement means if BYD builds its own factory, most capacity must be used for exports rather than supplying the local Malaysian market. For a car company wanting to "dig deep" locally, this cost structure is not cost-effective.

Another background is: Starting from July 1 this year, Malaysia requires the minimum CIF (Cost, Insurance, and Freight) for imported complete electric vehicles to reach 200,000 Ringgit (approximately $49,000 USD), and the minimum power output must be 245 horsepower. Some of BYD's main electric vehicle models sold in Malaysia are priced below 200,000 Ringgit—this means if these cars continue to be imported, they will be blocked by policy thresholds, highlighting the importance of local assembly even further.

BYD's Malaysia Foundation

Despite the adjustment to the factory construction plan, BYD's performance in Malaysia is not bad.

Since entering the Malaysian market in 2022, BYD has cumulatively sold over 35,000 electric vehicles. Last year, BYD sold 14,407 electric vehicles locally, becoming the highest-selling electric vehicle brand in Malaysia. In the first half of this year, sales exceeded 7,000 units.

Premium brands are also advancing: In July this year, the Denza Z9GT was launched in Kuala Lumpur with a price of 358,800 Ringgit, and the first batch sold out.

Ma emphasized that BYD "will continue to dig deep in Malaysia": "The specific location of the factory and the method of cooperation may change, but our goal has not changed."

Summary

BYD canceling the self-built factory in Malaysia is a pragmatic adjustment from "Heavy Assets to Light Cooperation".

Its logic is very clear: Malaysia's "80% export requirement" and "200,000 Ringgit CIF threshold" make the economic math of self-building a factory not add up, and make local assembly a necessity. Rather than carrying heavy assets to meet export requirements, it is better to borrow existing capacity from local partners to quickly achieve localized production.

This is actually a microcosm of Chinese automakers going global: Going global is not simply copying the domestic model abroad, but adapting to the target market's policies, costs, and localization rules. BYD's shift in Malaysia is "flexible adjustment" rather than "retreat"—its sales foundation (number one locally) remains, and the premiumization of Denza is also advancing.

From "Self-Build" to "Cooperation", it reflects the maturity of BYD's global strategy: no longer pursuing the form of "building a factory oneself", but result-oriented, obtaining localization benefits in a lighter way.