As speculated in our earlier report, Tesla – the leading BEV company in the world – is coming to Malaysia officially. A statement from the Ministry of Trade & Industry (MITI) today has confirmed that approval has been given for the carmaker, owned by Elon Musk who is one of the richest men in the world, to import Tesla vehicles.
Tesla’s application was considered under MITI’s program to attract Battery Electric Vehicle Global Leaders to invest in Malaysia and develop the EV industry and ecosystem. It is the first company to be given approval under this program and has been allocated APs (Approved Permits) for the importation of its vehicles although the number has not been mentioned, nor if there is a local partner involved. As mentioned earlier, Tesla has a subsidiary company registered in Malaysia which it has 100% ownership of.
Tesla will open an operating office in Malaysia and establish its Experience Centres as well as aftersales support centres. Globally, Tesla’s business model uses direct sales, an approach which does not employ franchised dealerships. The Experience Centres provide information and test-drives for consumers, enabling Tesla to interact directly with customers. This has given the company one competitive advantage which has helped it pull ahead of other carmakers in the EV business.
Whether the business model will work well in Malaysia remains to be seen but the auto industry is going through change and new methods may appeal to a new generation of buyers. The subscription model is also being explored by some companies and it’s still something which local consumers have to get used to. For many, not owning a vehicle after making monthly payments for a long period just doesn’t feel right.
Other conditions set by MITI include the installation of at least 50 high-speed chargers with a capacity of more than 180 kWh. At least 30% of the units are to be made available for use by owners of other EV brands. Similar requirements for setting up charging facilities also apply to other companies distributing EVs in Malaysia.
Tesla was an early provider of fast-chargers with its Supercharger network which today has over 40,000 Superchargers at 4,500 locations worldwide, The majority are in North America and in Asia, most are in China. Besides Superchargers, the company also has Destination Chargers which charge at lower speeds and are found at hotels or places where BEV owners are passing through. The aim is to have wide coverage so that BEV owners can travel long distances.
With the objective of developing the EV industry as quickly as possible, MITI also requires the carmakers who have approvals to employ and train at least 100 local workers in Malaysia, with not less than 80% of its full-time workforce to be Malaysian citizens. Tesla will also have to provide industrial internship and train at least 5 Malaysians per year to develop their skills for the industry.
It is also expected to collaborate with at least 10 academic organisations or Technical and Vocational Education and Training (TVET) centres in Malaysia to transfer knowledge and skills in the EV technology field. Tesla’s experience in developing and establishing charging networks should also be shared with local companies to help them in the development of the EV infrastructure.
For the longer term, the company will be discussing with MIDA plans for vehicle assembly or manufacturing and other industrial activities related to the EV industry, including Reuse, Repair, Recycle or Remanufacturing (4R) processes.
Should the company decide to assemble its cars locally, then it will enjoy the tax-exemptions until the end of 2027 otherwise this incentive will only be until the end of 2025 for the cars it imports. While Tesla might make related EV items in Malaysia, it seems unlikely that it will want to build them here as it already has a huge factory in China and another one in Germany, besides America. Indonesia is also keen to have the company make its batteries there as well as assemble cars.
While Tesla’s total sales volume of 1.3 million units in 2022 was well below those of Toyota (10.5 million) and Volkswagen (8.5 million), it continued to hold the No.1 position for battery-electric vehicles (BEVs). BYD was its closest rival and with total sales of 1.86 million units, it was the global leader in electrified vehicles. However, 51% of those were hybrid electric vehicles and not BEVs, which totalled 911,140 units.
