AFTER HAVING MANY conversations with automotive industry players as well as colleagues in government on the electrification of mobility in Malaysia, I am now of the view that forming a national consensus on the “why” is probably as important—if not more important—as the “how” in making significant progress on that front.

In 2024, 40.9% of cars sold in China were “new energy vehicles”—a Chinese term for all cars powered by electricity, either fully or in part—ahead of the US (20%) and Europe (34.5%). Leaders in China realized early on that there was no way they could beat the Germans and Japanese in terms of technology and sophistication if China merely continued producing more internal combustion engine (ICE) cars. Electrification was thus a leapfrog industrial strategy.

Moreover, China spent many years battling severe air pollution caused by mass industrialisation, especially in the heavy industries such as steel making. Up until the 1980s, the most common mode of transport in China was bicycles. But soon, the massive spike in car ownership among the burgeoning middle class and high dependence on coal as the main energy source contributed substantially to the worsening air quality. This has also been an important motivation for the transition to electric vehicles (EVs).

Just under 15 years ago, the main worry among Chinese geopolitical strategists was “the Malacca dilemma”. As China’s industrialisation was in part powered by petroleum shipped from the Middle East via the Malacca Strait, the Chinese were concerned that if the US enforced a blockade in the Malacca Strait, it would effectively cut off their fuel supply. To deal with the choke point, China decided to diversify its sources of oil imports, open up rail links with Central Asia and Europe, and cut down on petroleum consumption.

Slow Progress In Malaysia

The electrification of mobility in Malaysia, on the other hand, has been progressing at a snail’s pace. In 2024, Malaysia sold as many as 816,747 vehicles (total industrial volume, TIV), making it the second largest automotive market in Southeast Asia after Indonesia, surpassing Thailand. Yet, Malaysia’s battery electric vehicles (BEV) and xEV (hybrid electric vehicles, plug-in hybrid electric vehicles and fuel cell electric vehicles) sales were only 14,766 (1.8%) and 45,562 (5.6%). In comparison, the penetration rate of EVs are higher in other Southeast Asian countries in 2024: Vietnam (estimated to be 7.1%), Singapore (33.6%) and Thailand (estimated to be 15.4%).

There could be many reasons for this: incentives may not have been generous enough; range anxieties remain high, given that charging facilities lag behind; fuel price is still highly subsidised; and most industry players do not want to disrupt the highly profitable ICE car market.

Globally, electrification of mobility usually does not happen on its own without policy changes and support from the state.

This goes back to the “Why” question. Malaysian society—and especially the Malaysian government—will have to find the electrification of mobility compelling enough to make it happen fast.

The most prominent rationale cited in the push for electrification of mobility is that it is good for the environment, and would contribute to the nation meeting its emission/net-zero targets. However, this is not compelling enough for the state to coordinate across the system, and to expend its limited fiscal or financial firepower to speed up the transition.

I would like to suggest a three-fold answer to the “Whys”:

First, the electrification of mobility is likely to be the most effective tool for transitioning from the Malaysian public’s expensive dependence on fuel subsidies. At its height in 2022 and 2023, fuel subsidies (RON95, diesel and gas) cost the Treasury RM50bil each year.

In 2024, the government has boldly removed diesel subsidies on the Peninsula and is in the process of removing petrol subsidies for the top 15% income earners. But how to determine who the top 15 percentile are, and how to prevent the system from being gamed remain to be seen. There may come a point where incentivising a rapid transition into electrification is more worthwhile and more effective.

Second, Malaysia is now a net oil importer, never mind that the nation exports higher grade petroleum. Cutting total consumption of oil and restoring Malaysia’s position as a net oil exporter should be made a strategic objective, paving the way for a whole-of-government drive to electrify mobility.

Third, it is regrettable that the strong semiconductor sector in Malaysia has never had much horizontal connection to the automotive industry.

I was in Detroit in May 2023 for the Asia Pacific Economic Cooperation (APEC) meeting. Gina Raimando, then US Commerce Secretary, told our group of ministers that when Malaysia locked up its factories during the Covid-19 pandemic, General Motors and other major automotive manufacturers in Detroit had to shut down. That was how dependent the world was on Malaysian semiconductors.

However, by some accounts, while Malaysia produces a third of the global automotive chips, Proton remains dependent on China and Perodua on Japan for technology.

For Malaysia to cement its position as the “indispensable middle” in the semiconductor industry, Malaysia needs to create its own designs, products and other intellectual properties. The electrification of mobility, especially in the race to develop smart and autonomous driving, is battleground that the Malaysian semiconductor strategy should not concede. Clearly, the future of Malaysia’s automotive policy should be tied to that of the semiconductor sector, for strategic and economic reasons.

In fact, we already have all the tools, the “How”, to electrify mobility. What Malaysia needs is to convince its people of the “Whys”.