Written by | Liu Ying

Edited by | Huang Dalu

Designed by | Zhen Youmei

Oil palm plantations in Tanjung Malim have been cleared, and bulldozers are parked at the edge of the open land.

BYD originally planned to build Malaysia's first local assembly plant here and have cars rolling off the production line in the second half of 2026. While the site has now completed preliminary preparations, the project is stalled at the permit conditions stage, and it remains unclear whether construction of the main factory building has officially begun.

The disagreement lies in three major conditions set by the Malaysian government: the factory is planned to produce 50,000 vehicles annually, but sales in Malaysia must not exceed 10,000 units per year, and the remaining production must be exported in principle.关键环节 such as body welding, painting, and final assembly must remain local. The minimum on-road price for locally sold models is also capped at 100,000 Ringgit (approximately 165,000 RMB).

The last condition directly targets BYD's most familiar competitive strategy. Even with various capabilities to drive costs down further, BYD cannot expand local demand through lower selling prices, nor can it turn policy incentives gained from local assembly into ammunition for another price war.

For the Malaysian government, this is not simply price management. Perusahaan Otomobil Kedua Sdn Bhd (Perodua), the second national car company, sells the most in Malaysia, with sales of approximately 360,000 units in 2025. Proton, Malaysia's first national car brand, follows closely with sales of nearly 158,000 units. These two local enterprises together control over 60% of the new car market, with connections to local parts companies, distribution networks, and hundreds of thousands of jobs.

Setting a minimum selling price keeps foreign electric vehicles outside the core price bracket of domestic brands, especially avoiding BYD's downward expansion into the mass market where Perodua relies on volume sales, buying time for local enterprises to complete electrification.

Almost at the same time, some Chinese companies were in a different situation.

In May 2026, PROTON Holdings Berhad, in which Geely is involved, announced the expansion of a new energy factory, raising the planned annual capacity from 20,000 units to 42,000 units.

In June 2026, the first phase of an automotive industrial park built by Chery with an investment of 2.2 billion Ringgit completed structural topping-out, with the steel structure glowing grey-white in the sunlight.

In the same month, the XPeng G6 drove off the Melaka production line of EP Manufacturing Berhad (EPMB), and the Leapmotor C10 also began assembly at a Stellantis Group factory in Kedah state.

Top 20 Electric Vehicle Brands in Malaysia from January to June 2026

Source: Data.gov.my

When BYD stopped at the factory entrance, other Chinese car companies did not leave. They continued to enter the Malaysia manufacturing system along paths such as equity cooperation, independent factory construction, local contract manufacturing, and sharing multinational group factories.

Since July 1, 2026, the declared CIF value of newly entering fully imported pure electric vehicles in Malaysia must not be less than 200,000 Ringgit, and motor power must not be less than 180 kW. Vehicles already in the country, port, or during transport may continue to follow the previous rules.

200,000 Ringgit is just the cost, insurance, and freight value. After including taxes, logistics, and distribution fees, the space for medium and low-priced imported electric vehicles in the mainstream market is further compressed.

In the first half of 2026, the registration volume of pure electric vehicles in Malaysia reached 31,738 units, accounting for 7.8% of all new car registrations. Proton ranked first with 13,530 units, followed by BYD with 5,675 units.

100,000 Ringgit, Blocking BYD's Price War

In August 2025, Tanjung Malim was still a new coordinate on BYD's Southeast Asia expansion map. BYD and Sime Motors announced they would build a local assembly plant at the Kuala Lumpur Kepong Science and Technology Park in Perak state, with a planned land area of about 600,000 square meters, nearly 150 acres, with vehicles expected to begin production in 2026.

Liu Xueliang, General Manager of BYD's Asia-Pacific Auto Sales Division, said at the time: "This commitment is also about the future of investing in Malaysia's electric vehicle ecosystem, including local assembly, talent development, and electric mobility."

Malaysia has become an important market for BYD in Southeast Asia. BYD even dispatched its own RoRo ship to Malaysia for the first time in August 2025. This ship can carry 7,000 vehicles, and the voyage also includes the Philippines, Indonesia, Singapore, and Thailand.

The turning point occurred over a month later.

On September 29, 2025, BYD obtained a Temporary Manufacturing License. The project planned investment was about 1.3 billion Ringgit with an annual capacity of about 50,000 units. However, industrial conditions attached to the permit quickly became the center of the dispute between the two parties. In 2026, the Ministry of Investment, Trade and Industry (MITI) publicly stated that the BYD project needed to comply with three major requirements.

Deputy Minister of Investment, Trade and Industry (MITI) Shen Zizhen

Source: Malay Mail

The first requirement limits local sales. BYD can sell at most 10,000 locally assembled cars in Malaysia per year, about 20% of the planned capacity. The remaining production must be sold overseas in principle. The purpose is to improve trade balance through large car investment and enter the global supply chain.

The second requirement increases manufacturing depth. Processes such as body welding, painting, and interior assembly must remain in Malaysia. Importing body parts that have already been welded and painted, then installing powertrains, interiors, and tires, is insufficient to reach the local value-added level the government hopes to achieve.

The third requirement limits prices. The minimum on-road price for BYD assembled models sold locally is 100,000 Ringgit. Previously, the figure of 200,000 Ringgit circulated in the market. MITI later clarified that this corresponded to the CIF value threshold for newly applying for fully imported pure electric vehicles, not the minimum retail price for BYD's locally assembled models.

This price line has a clear industrial protection meaning. Even if BYD lowers tariffs, logistics, and manufacturing costs through local assembly, it will be difficult to launch a sustained downward price war.

Protected are not only Proton, which is deeply cooperating with Geely, but more importantly Perodua, the domestic brand with the highest sales volume in Malaysia. Proton has accelerated new energy transformation using Geely's platforms and technology, while Perodua firmly occupies the larger mass consumer market.

A minimum selling price of 100,000 Ringgit is more like a direct price defense line for Perodua. It restricts BYD to a relatively high market segment. Foreign brands can still enter, but the core sales base of the local largest brand will not be pierced by a price war for the time being.

Many countries require foreign car projects to increase localization rates, undertake export tasks, or avoid low-price competition. Stacked on a factory with an annual capacity of 50,000 units, the commercial difficulty rises rapidly. BYD cannot quickly expand local sales volume with low prices, can only rely on about one-fifth of capacity to serve the local market, and must invest heavily in complete body and painting facilities. The remaining cars must find buyers in Southeast Asia from the moment of production.

Minister of Investment, Trade and Industry of Malaysia Johari Abdul Ghani

Source: Facebook

The price floor limits demand expansion. The local sales cap depresses the domestic base on which the factory can rely. The deep manufacturing requirement raises initial fixed investment. These three conditions make the commercial closed loop originally relying on price, scale, and vertical integration difficult to operate.

Malaysian Minister of Investment, Trade and Industry Johari Abdul Ghani said: "These are precisely the conditions they cannot agree to. We must protect our automotive industry."

As of August 4, 2026, public information has not shown that BYD has officially cancelled the project. The site has cleared original oil palms and completed preliminary preparations. BYD has not announced further plans for the main project, while the Malaysian government stated that talks are still ongoing.

89 Brands Fighting for Less than 10% of the Market

While the car production line is still in negotiation, Chinese brands have already entered the streets and alleys of Malaysia.

In 2022, the share of new car registrations for Chinese brands in Malaysia was only 0.08%, with only 578 units for the year. By 2023, it rose to 1.27%. In 2024, it reached 4.01%. In 2025, it increased further to 7.61%. In the first five months of 2026, it rose to 8.92%. These figures do not include models sold under the Proton brand using Geely technology.

In 2025, OMODA JAECOO under Chery registered 17,845 units, BYD registered 14,407 units, and the Chery brand itself registered 12,942 units. All three brands entered the top ten sales by brand in Malaysia. Great Wall also sold 5,876 units.

Chinese car companies are filling product gaps with electric vehicles, plug-in hybrid vehicles, city SUVs, and new energy MPVs. The foreign brand market previously dominated by Japanese brands is now seeing new competitors.

More logos appear, but sales remain highly concentrated. According to registration data organized by the Road Transport Department (JPJ) of Malaysia, there were 98 car brands in Malaysia that registered at least one vehicle in 2025, higher than the 70 brands in 2010. However, the top five brands still occupy 84.3% of the market. Just nine brands can cover 90% of registrations, while the remaining 89 brands fight for less than 10% of the market, of which 51 brands registered fewer than 100 units for the year.

Based on 2025 overseas market sales data, Chinese car brands perform well in overseas markets

Source: Malaysia Road Transport Department

According to data from the Malaysian Automotive Association (MAA), national car sales in Malaysia in 2025 were about 820,000 units. Perodua sold 359,904 units that year, and Proton sold nearly 158,000 units. These two national brands together occupied over 60% of the market. The space left for all Chinese, Japanese, South Korean, and European foreign brands was only over 300,000 units.

Additionally, in the first half of 2026, new car registrations in Malaysia were 409,310 units. The proportion of pure electric vehicles rose from 4.3% in the same period last year to 7.8%. Growth is fast, but the market is still in the early stage driven jointly by policy and infrastructure.

As of February 5, 2026, Malaysia has built 5,624 public charging facilities, completing only 56% of the 10,000 target. Among them, DC fast charging reached 1,923, exceeding the initial target of 1,500. AC charging facilities are only 3,701, completing 40% of the 8,500 target. Residential areas, commercial districts, and local grid connections still need supplementation.

History and Reality of Local Protection Policies

Malaysia's opening to electric vehicles initially started from the import side. From 2022 to December 31, 2025, the government provided import duty and excise duty incentives for fully imported pure electric vehicles, allowing overseas brands to quickly increase models, reduce early prices, and help consumers understand electric vehicles. In 2025, the usage of electric vehicles in Malaysia increased to 44,813 units, compared to only 3,127 in 2022.

After this stage completed market cultivation, policy shifted to manufacturing. Import incentives for fully imported vehicles expired at the end of 2025. Relevant incentives for locally assembled pure electric vehicles were extended to the end of 2027. The 200,000 Ringgit CIF value and 180 kW power thresholds implemented in July 2026 further pushed fully imported vehicle models toward the high-end market.

For Chinese car companies hoping to continue competing in the 100,000 to 200,000 Ringgit price bracket, local assembly gradually changed from a choice to reduce tax burden into an important condition for staying in the mainstream market. Companies that already own Malaysian factories or can find contract manufacturers can complete the transition relatively quickly. Companies applying for large independent factories from scratch must face stricter industrial conditions.

XPeng G6

Source: CNA

This industrial policy preference has a long history. When Malaysia adjusted its National Automotive Policy in 2009, it already acknowledged that overcapacity existed domestically and explicitly retained the contract assembly system, allowing existing manufacturing enterprises to make idle capacity available to third parties to improve factory and equipment utilization. At that time, it was also stipulated that relevant models could not directly impact domestic car manufacturers' products.

More than a decade later, existing factories of EPMB, Inokom, and Stellantis have once again become entry points for foreign car companies to enter local manufacturing. The continued consideration is the same. The government hopes foreign investment brings orders and technology, and also hopes to use up already built infrastructure first, avoiding a limited market continuously replicating new idle capacity.

The Ministry of Investment, Trade and Industry of Malaysia said in a statement: "Our policy is not about closing the door, but ensuring every investment leaves deep local value, technology transfer, and sustainable employment."

Beyond industrial upgrading, protection of domestic brands is also directly written into policy interpretations. Proton and Perodua together control over 60% of the new car market. The two systems connect to a broad automotive ecosystem involving over 700,000 jobs. The government also hopes they establish their own models, technologies, and supplier systems in the early stages of electrification.

Proton e.MRS7

Source: paultan.org

Perodua has already begun to convert this policy space into real projects. In December 2025, the company launched its first pure electric vehicle, QV-E. This vehicle was developed with an investment of 800 million Ringgit and is produced in a newly built Smart Mobility Plant. The initial monthly capacity is 500 units, with a plan to increase to 3,000 units per month in the third quarter of 2026.

Zainal Abidin Ahmad, President and CEO of Perodua, said: "Currently, we can produce 500 units per month. By the third quarter of 2026, we will be able to provide 3,000 units per month."

In the early stage, QV-E is supplied by 52 Malaysian enterprises. Perodua plans to increase the number of suppliers to 70 before 2030 and raise the localization rate from over 50% in early 2026 to 70%. By June 2026, the company stated that monthly production has already exceeded 500 units. After producing body parts locally, spare parts supply and operational efficiency have also improved.

Below 100,000 Ringgit, Whose Market

To understand this price floor, one must first see what Malaysian consumers actually buy.

In 2025, Perodua sold 359,904 units, estimating a market share of 43.9%. Among them, Bezza sold 100,488 units, Axia sold 84,291 units, and Myvi sold 72,724 units. These three models were also the three most registered models in Malaysia. Their official starting prices were only 34,580 Ringgit, 22,000 Ringgit, and 46,500 Ringgit respectively.

The sales pillars of Proton are also located in the low-price bracket. In 2025, Saga sold 74,013 units, accounting for nearly half of Proton's total annual sales. The latest model's starting price is 38,990 Ringgit. X50's starting price is 89,800 Ringgit, and S70's starting price is 68,800 Ringgit. The two local brands rely not on the high-end market above 100,000 Ringgit, but on family car needs between 20,000 and 90,000 Ringgit.

Pricing and Sales of Main Models for Malaysia's Two Major Local Brands

Source: Automotive Business Review

Note: Prices are official starting or on-road prices for Peninsula Malaysia, excluding insurance; X50 and S70 sales are data for the first 11 months of 2025 announced by Proton, others are full-year 2025 data.

The price comparison of electric vehicles shows the protection direction of the policy even more clearly. Proton e.MAS 5's special listing price starts at 56,800 Ringgit; Perodua QV-E sells for 63,499 Ringgit under the battery leasing scheme and 87,499 Ringgit for full vehicle purchase. Both local enterprises can sell electric vehicles below 100,000 Ringgit, while BYD's locally assembled models are required to start from 100,000 Ringgit.

Price Floor for Local Electric Vehicles in Malaysia vs. BYD Local Assembly

Source: Automotive Business Review

This is not just for Proton defense. The larger protected object is Perodua. It is the largest car brand by sales volume in Malaysia, controlling over 40% of the national market and the largest local supply chain. The 100,000 Ringgit floor basically blocks BYD above the starting price of all existing products of Perodua, and also leaves price buffer room for Proton Saga, S70, X50 entry-level, and e.MAS 5.

Protecting domestic brands is actually to protect jobs. The minimum selling price of 100,000 Ringgit, on the surface, manages BYD's retail price, but actually it first defends Perodua's mass market. It also protects Proton and the industrial ecosystem behind the two enterprises. If companies like BYD quickly expand low-price local production with the help of tax incentives, affected will not only be the whole vehicle sales of the two local car companies but also a batch of Malaysian suppliers who have recently invested in equipment, developed products, and trained employees for electric vehicles.

From this perspective, Malaysia does not oppose BYD entering, but opposes BYD rapidly rewriting the market structure with low prices. The government hopes foreign capital brings factories, technology, exports, and jobs, but cannot let foreign capital use local incentives to squeeze domestic brands in return. BYD can stay, but must change its approach.

Exporting 40,000 Cars: How Difficult

BYD already has a factory with an annual capacity of 150,000 units in Rayong Province, Thailand. This factory started production in July 2024, producing pure electric vehicles and plug-in hybrid vehicles, simultaneously facing the Thai and other ASEAN markets. The Indonesia factory planned investment is 1 billion US Dollars, with a designed annual capacity also reaching 150,000 units. Long-term goals also include exports.

The Malaysia project plans an annual output of 50,000 units. If only 10,000 units can be sold locally, the remaining 40,000 units need to be exported. These cars will compete for the regional market jointly with BYD's right-hand drive models produced in Thailand, Indonesia, and China's local markets.

Bill Russo, CEO of automotive industry consultancy firm Automobility Limited, said: "Forcing Malaysia to become an export-based base will create duplication, not complementarity."

BYD Thailand Rayong Opens First Electric Vehicle (EV) Factory

Source: Reuters

Whole vehicle factories usually rely on domestic sales volume first to support production ramp-up, then use the remaining production for export. Malaysia's conditions pushed this sequence forward. The new factory has not yet formed a stable supply chain and scale effect but needs to rely on overseas orders to digest most of the production volume. Commercial risks are naturally higher.

Additionally, according to the general rules of origin under the ASEAN Trade in Goods Agreement (ATIGA), products usually need to reach at least 40% of ASEAN Regional Value Content (RVC) or complete specified four-digit HS code changes to obtain preferential tariffs between ASEAN member states. Specific models also need to meet corresponding product rules of origin.

Even if a car is completed in Malaysia with welding, painting, and final assembly, it does not automatically become a Malaysia-origin car eligible for preferential tariffs. If batteries, motors, electronic controls, body parts, and electronic systems mainly come from China, enterprises still need to increase materials, labor, and manufacturing value in Malaysia or other ASEAN countries to improve the likelihood of obtaining regional origin status.

This also explains the connection between complete manufacturing, local supply chains, and export requirements. Malaysia requires new factories to leave welding and painting. It is not just adding a few procedures on the production line; it also hopes more regional value is formed locally so that exported cars truly possess tariff conditions to enter the ASEAN market.

Proton e.MRS7

Source: paultan.org

Malaysia already has a car export foundation, but strengths still remain mostly with parts. According to Malaysia External Trade Development Corporation (MATRADE) data, car-related product exports in 2024 amounted to 10.37 billion Ringgit, up 2.3% year-on-year. Main products include automotive parts, bumpers, body parts, steering systems, and some plug-in hybrid vehicles. Main destinations are Singapore, Thailand, Australia, Taiwan, and Indonesia.

This means that if BYD wants to stably export about 40,000 cars from Tanjung Malim, it must convert existing parts, port, and trade advantages into whole vehicle certification, logistics, and overseas sales networks.

Local supply chain requirements will also touch upon BYD's original production mode.

BYD controls costs through high vertical integration. A 2023 breakdown study by UBS Group AG estimated that about 75% of the part value of BYD Seal comes from the group's internal system, significantly higher than Tesla Inc.'s Model 3 and VW ID.3.

Malaysia hopes its own glass, plastic, metal, electronics, and other automotive parts companies get orders. If BYD continues to rely heavily on group internal suppliers, the orders obtained by local industry are limited. However, if suppliers are changed rapidly, quality certification, price negotiation, and production adaptation need to be completed again.

Geely Already Seated at the Main Table

In the same Tanjung Malim, Proton's new energy factory faces another picture. In the factory area, white body parts are neatly arranged at the end of the inspection line. In September 2025, this factory officially came into use. The initial annual capacity was 20,000 units, producing e.MAS 7 first and reserving production space for e.MAS 5. The factory was initially designed to continue expanding to about 45,000 units.

Geely has an identity that other Chinese car companies cannot easily replicate. In 2017, Geely Holding Group acquired 49.9% of Proton shares. Malaysia's DRB-HICOM Berhad continues to hold 50.1%. Geely provides platforms, power, and new energy technology. Cars enter the market through the Proton brand. Malaysia retains the brand, production network, and local supplier system.

In May 2026, Proton announced an additional investment of 37 million Ringgit to raise the new energy factory planned annual capacity from 20,000 units to 42,000 units. At that time, the factory had 391 employees. In the first four months of 2026, 8,472 e.MAS 5 units were delivered, and Proton's new energy model total sales reached 11,617 units, an increase of 329% year-on-year. Expansion has already been supported by actual orders.

Proton e.MRS5

Source: paultan.org

Abdul Rashid Musa, Deputy Chief Executive Officer of Proton, said: "Customer demand has exceeded initial expectations, so we have accelerated the local capacity plan."

Geely and Proton cooperation has also gone beyond whole vehicle assembly. The Tanjung Malim Powertrain Plant can produce turbocharging and naturally aspirated engines, hybrid special engines, dual-clutch transmissions, hybrid transmissions, and electric drive units. Currently, engine design annual capacity is 240,000 units. Proton has cumulatively invested over 121 million Ringgit and plans to increase capacity to 400,000 units by 2028.

The factory currently employs over 500 people and cooperates with 16 suppliers, half of which are Malaysian enterprises. Over 50 Malaysian employees have gone to China for training. More importantly, parts produced in Tanjung Malin are already used in models sold by Geely to markets such as Vietnam, Mexico, and South Africa. Exports have turned from future plans into actual cargo flow.

Proton Opens R&D Facility in Hangzhou Bay, China

Source: Proton Official Website

That is to say, after Geely entered Malaysia through Proton, the local factory has integrated into its international production network. Engines, transmissions, and electric drive parts can flow across brands and markets. Malaysia gets not just an assembly line serving domestic sales.

Geely and DRB-HICOM are also promoting the Tanjung Malin Automotive High-Tech Valley. The goal is to attract about 32 billion Ringgit investment in multiple years, covering whole vehicles, suppliers, R&D, education, and park supporting facilities. This figure belongs to the long-term investment promotion target of the entire industrial park and cannot be all viewed as funds invested by Geely.

In February 2026, Zeekr, under Geely, also planned to conduct local assembly in Malaysia. Malaysia will become its first assembly market outside China. The 7X is the first confirmed model to be imported. As of August 4, 2026, the enterprise has not announced the official production time. Outsiders speculate it may be introduced as early as 2027, still awaiting company confirmation.

Chery Builds Park, More Brands Borrow Factories

In June 2026, the first phase of the Chery Smart Automotive Industrial Park completed structural topping-out. Steel frames glowed grey-white in the sunlight. The next stage will involve internal construction, production system installation, and equipment commissioning. The project is located in Lembah Beringin, Selangor, covering about 200 acres. Announced investment amount is 2.2 billion Ringgit. It will serve multiple brands in the future including Chery, OMODA JAECOO, iCAUR, and Lepas.

Zhang Guibing, Executive Vice President and General Manager of International Business Division of Chery, said: "Upon completion of the project, it will create high-value jobs, build R&D centers, and expand exports to neighboring countries."

Chery obtained manufacturing permits in June 2025, earlier than the September 2025 new rule breakpoint. Project agreements and construction progress thus enjoy stronger certainty. Multi-brand shared lines, supplier parks, and export plans also make this factory bear more regional functions than ordinary CKD projects. However, whether design capacity can be converted into stable production still needs order verification after operation in 2027.

XPeng Producing at EPMB Factory

Source: paultan.org

More Chinese car companies chose a simpler road with more investment. EPMB was originally a Malaysian automotive parts company. In recent years, it has developed its Melaka factory into a multi-brand contract manufacturing base. Great Wall Haval H6, WEY G9, MG S5 EV, and XPeng G6 have sequentially entered the production system.

In March 2026, the first locally assembled S5 EV under SAIC Motor's MG brand rolled off the line in Melaka. Initial planning monthly production was 120 to 180 units. Production in 2026 is expected to be 1,500 to 2,000 units. The long-term goal of the whole EPMB factory is an annual output of 30,000 units. This number needs to be shared by multiple brands and cannot be understood as capacity for a single MG model.

In June 2026, the first locally assembled XPeng G6 also rolled off the EPMB production line. XPeng subsequently opened local assembly version reservations in July 2026. Cooperation between the two sides also includes X9 and X9 PowerX range-extended models. XPeng reduced fixed investment for independent factory construction. EPMB increased equipment utilization by adding models.

Outside EPMB, Kulim in Kedah state also owns a more mature shared factory. Sime Darby Berhad's Inokom Corporation Sdn Bhd covers 200 acres. It has body, painting, final assembly, and centralized warehousing facilities. Over 2,700 employees are all from Malaysia and connected with 370 local suppliers.

Inokom currently produces cars for six brands including BMW, MINI, Porsche, Mazda, and Hyundai. Production volume increased from 20,500 units in 2021 to over 31,800 units in 2025. Since 2018, BMW and MINI have exported over 11,800 units of Inokom assembled models to the Philippines and Thailand. In 2026, locally assembled BMW i5 became the first pure electric vehicle assembled by BMW in the Asia-Pacific region.

Stellantis Signs Cooperation with Leapmotor, Starting Local Assembly in Gurun

Source: CNA

Inokom has cumulatively exported over 24,500 cars to the regional market. The factory also has a BMW engine production line. It demonstrates that borrowing local factories does not necessarily mean only completing the last few assembly processes. Mature contract manufacturers can also provide welding, painting, engines, quality control, supplier management, and whole vehicle exports.

Leapmotor takes another shared path. In June 2026, Stellantis began assembling Leapmotor C10 at the Gurun factory in Kedah and plans to import B10 before the end of 2026. The project investment is 2.23 million Euros for local assembly development, with another 3.1 million Euros for production line and infrastructure upgrades.

Isaac Yeo, Managing Director of ASEAN for Stellantis, said: "Leapmotor starting local assembly in Gurun is an important step for Malaysia to stand at the forefront of ASEAN electric vehicle industrialization."

This production line currently first serves the Malaysian market. Exports are still under evaluation. Leapmotor can use Stellantis' existing factories, quality systems, and employees without building welding and painting facilities for limited sales alone. Stellantis can also give existing factories new models and electric vehicle manufacturing investment.

Leaving Brands is Easy, Leaving Industry is Hard

In Malaysia, 98 brands are fighting for about 820,000 demand simultaneously. Nine brands take away 90% of sales. The market can accommodate many car models and brands, but the number of complete factories that can sustainably support is very limited.

Malaysia has 592 professional automotive suppliers, multiple free trade agreements, and a foundation in electronics and semiconductor industries. Car-related product exports have also exceeded 10 billion Ringgit. But it lacks the huge whole vehicle export scale like Thailand and the larger domestic market like Indonesia.

Thus, governments and foreign car companies jointly explored several different paths.

Entering domestic brand, powertrain, and export systems like Geely can obtain deeper industrial positions. Determining projects before rule changes and promising to build multi-brand industrial parks like Chery can continue to advance. Using existing factories of Malaysian enterprises like SAIC, Great Wall, and XPeng can reduce duplicate investment. Relying on manufacturing bases of multinational shareholders like Leapmotor can enter local production faster.

EPMB Adds MG S5 Electric Vehicle to Melaka Factory Assembly List

Source: paultan.org

BYD chose the independent factory construction model with stronger control and heavier investment, which coincidentally encountered new policy barriers. The path it usually uses in other markets is to first expand sales volume with competitive prices, then amortize manufacturing costs through scale. Malaysia, however, sets a price bottom first, then sets a local sales cap, and finally requires the factory to bear deep manufacturing and export tasks. Therefore, BYD's most proficient price war loses its room to maneuver.

For Malaysia, this set of policies also carries many risks. Excessive export requirements may lead investors to turn to other countries. Price thresholds will reduce the choice of affordable models. If domestic brands rely on protection for too long, the pressure to improve efficiency may also weaken.

At the same time, neighboring Thailand has already shown the other side of too rapid local capacity expansion.

Thailand initially attracted whole vehicle imports through subsidies while requiring participating enterprises to complete corresponding production quantities locally afterwards. By the end of 2024, relevant plans had brought about 84,000 imported pure electric vehicles. However, domestic car demand weakened, and production obligations came together.

The Thai government subsequently extended some production deadlines, temporarily postponing the pressure of compensatory capacity central release but did not end price competition. In 2025, pure electric vehicle sales and local production volume increased significantly, but the government still needed to adjust policies again at year-end through export offsets, registration extensions, and exit mechanisms.

Malaysia's vigilance also has the realistic background of BYD in Thailand.

In 2024, BYD and its distribution system in Thailand continuously offered significant discounts. Some early car buyers believed vehicles depreciated rapidly. The Thai consumer protection agency received about 70 complaints and launched an investigation. Some consumers claimed sales staff hinted prices would rise after incentives ended, but vehicle prices were subsequently reduced further. The investigation ultimately did not find BYD's discounts violated advertising law, but rapid price changes had triggered vigilance among consumers, dealers, and the government.

When whole vehicle enterprises continuously pass down price reduction pressure to the upstream, supplier profits, cash flow, and sustainable investment capabilities will all be tested.

Therefore, what Malaysia worries about is not just consumers buying cheaper cars, but BYD using tax exemptions and local assembly incentives to enter at low prices, rapidly expanding sales volume, and then passing the pressure to Perodua, Proton, local suppliers, and the distribution system. From the Thai experience, setting defense lines in advance is not baseless.

BYD Service Center and Sales Gallery in Shah Alam, Selangor

Source: CNA

Malaysia neither wants to merely become a sales point for tax-exempt imported cars nor can afford the cost of every foreign brand replicating a complete production system domestically.

The more realistic result is that Chinese car brands continue to increase, but production resources gradually concentrate in Proton, EPMB, Inokom, Stellantis, and a few large industrial parks. Multiple brands share factories, employees, and suppliers.

BYD has not officially cancelled the project, so declaring it has withdrawn from Malaysia at this time is still premature. But the original business plan has been frustrated. What it faces is not just a permit negotiation, but Malaysia's new boundary drawn for foreign automotive enterprises—come to build cars, participate in competition, but cannot pierce the defense line of local brands with low prices.

What is truly worth discussing is not whether Malaysia has reason to prevent, but whether prevention is appropriate. Malaysia chose to let local industry security take priority over price competition and consumers' short-term interests.

Main References:

1. Reuters, "Thailand to extend production timeframe for battery EVs", December 4, 2024.

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4. Reuters, "China's intense EV rivalry tests Thailand's local production goals", July 5, 2025.

5. Thailand Board of Investment, "Thailand EV Board Adjusts EV3/EV3.5 Terms to Promote Exports as Investment in EV Supply Chain Tops 137 Billion Baht", July 30, 2025.

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7. Reuters, "Thailand works on $700 million EV plan to replace 80,000 vehicles", July 23, 2026.

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11. Malaysia Ministry of Investment, Trade and Industry, "MITI Reaffirms Commitment to Sustainable Automotive Growth; Clarifies BYD Investment and Sector Policies", March 31, 2026.

12. PROTON, "PROTON Accelerates EV Expansion to Cater to Demand for e.MAS Models", May 29, 2026.

13. PROTON, "PROTON Leads Malaysia's Automotive Transformation with Advanced Powertrain Hub", June 23, 2026.

14. Chery Malaysia, "Chery Reaches New Heights with Lembah Beringin Topping-Out", June 26, 2026.

15. Stellantis, "Stellantis Malaysia Officially Commences Local Assembly of Leapmotor Vehicles at Gurun Plant, Starting with the Flagship C10 SUV", June 4, 2026.

16. Sime, "Inokom Strengthens Malaysia's Automotive Assembly Capabilities Through Local Expertise and Global Partnerships", June 25, 2026.

17. Perodua, "Perodua Launches QV-E, Malaysia's First Homegrown BEV", December 1, 2025.

18. MATRADE, "Malaysian Automotive Sector Drives Export Growth at Automechanika Shanghai 2025", December 16, 2025.

19. Malay Mail, "Miti: EV Import Policy Revised After Tax Incentives End, RM200,000 CIF Threshold Set", July 8, 2026.

20. Bernama, "MITI: 5,624 Public EV Charging Units Installed Nationwide", February 5, 2026.

21. Paul Tan, "Malaysia Has Never Had More Car Brands: 98 Fought for Buyers in 2025, but 9 Still Took 90% of Sales", June 19, 2026.

22. Paul Tan, "EV Sales in Malaysia, First Half of 2026—31,738 Units, Up 85% on Last Year; Proton Drives Growth", July 13, 2026.

23. BYD Sime Motors, "BYD & Sime Motors Mark a Triple Milestone in Malaysia", August 22, 2025.

24. BYD Sime Motors, "BYD Zhengzhou's Maiden Voyage to Malaysia with a 7,000-Unit Capacity to Fulfil Malaysian Dreams", August 6, 2025.

25. Perodua, "Perodua Expects 2025 TIV to Surpass 2024, and Looks at a Better 2026", January 13, 2026.

26. PROTON, "Proton Defies Market Trends: 2025 Sales Reach 157,976 Units as Exports Hit 13-Year High", January 2, 2026.

27. Reuters, "BYD's Steep EV Discounting in Thailand Sparks Backlash, PM Seeks Assurances", July 5, 2024.

28. Reuters, "Thai Investigation Clears BYD over Discounts, Sources Say", November 29, 2024.

29. Reuters, "BYD Asks Suppliers to Cut Prices as China Auto War Intensifies", November 27, 2024.