Unless you have been living in the jungle or some remote areas, chances are you would notice at least one new Chinese car showroom in your area. Even if there isn’t any, you can’t miss the sudden jump of unfamiliar brands on the road in Malaysia. From Aion to Zeekr, consumers are spoilt for choice with models like Atto 3, MG5, Dolphin, Omoda 5, Haval H6, Jaecoo and the list goes on.

 

The arrival of dozens of models from China obviously is to compete directly with well established foreign carmakers in the country, especially from Japan, South Korea, Europe and the U.S. It was like the Chinese automakers have declared war on the Western powers and its allies. Heck, even luxury MPVs like Alphard and Vellfire will see Great Wall Motor’s “Wey 80” entering the market next year.

 

The invasion of Chinese brands has forced local car manufacturer Proton to unveil its own first EV (electric vehicle) on Monday (Dec 16) – “e.MAS 7” SUV at the Malaysia International Trade and Exhibition Centre in Kuala Lumpur. Priced at RM105,800 for the most basic configuration to the top-of-the-range model at RM123,800, the competition will only get tougher in the local EV market.

Actually, the so-called Malaysian first home-grown electric vehicle is merely a “rebadged” of the Galaxy E5 built by Chinese carmaker Geely, who acquired a 49.9% stake in unprofitable automaker Proton in 2017. A pet project of former Prime Minister Mahathir, Proton had sucked up RM14.6 billion in taxpayers’ money – bailout – since it was founded in 1985 to 2016.\

 

Zhejiang Geely’s investment has allowed Proton “to move to strengthen its weakened finances and technological capabilities”. Prior to the acquisition, Proton’s market share dropped to less than 15% (2015) from 53% (2001). With the introduction of flagship X70, its first SUV, followed by X50, X90, S70 and remodeled best-selling Saga, Proton’s market share steadily climbed to 19.4% in 2023.

 

Known for its out-dated model, boring design and poor record of quality control despite preferential treatment from the government, the Chinese management led by Li Chunrong has turned around a once-celebrated Malaysian marque through an aggressive cost-cutting drive, sourcing cheaper components from China, improved aftermarket services, and of course, good management.

Still, is Proton’s first EV a game changer? Many have sarcastically congratulated the national car for sending 200 engineers to China to learn how to change the “Thundercats” logo for Malaysia’s first electric vehicle. Others defended the competitive pricing compared to its closest competitor, the Atto3 EV SUV which China’s BYD is selling for RM149,800.

 

However, the Galaxy E5 comes with a price tag that starts from 112,800 Yuan (RM69,700) in China. This has triggered debates whether the “e.MAS 7” is indeed value for money or a pricey Chinese knockoff. Sure, it’s cheaper than Atto3, Omoda E5, XPeng G6 or Tesla Y, but at the same it is more expensive than Neta V (RM100,000) or MG ZS (promotional RM99,000).

 

In fact, if you don’t mind an all-electric 7-seater MPV, BYD has introduced its sexy M6 multi-purpose vehicle at just RM109,800, where the standard model has a driving range of 420 kilometres – better than e.MAS’ 345 kilometres. Besides, the cheaper e.MAS Prime variant doesn’t have active grille shutter, panoramic glass roof, powered tailgate, head-up display, 256-colour ambient lighting, auto-dimming rearview mirror, and front parking sensors. 

Therefore, the Proton’s EV isn’t cheap and certainly does not offer value for money. Because it’s a national car, the expectation from Malaysians is that e.MAS 7 should be way cheaper than all competitors. It should be priced below RM100,000 as anything above that figure is not affordable for the average middle-class consumer. Thanks to the Ministry of International Trade and Industry (MITI), imported EVs cannot be priced below RM100,000 on-the-road.

 

So, until Proton produces its own CKD (Completely Knocked Down) manufacturing plant to assemble locally its EVs, the price will remain above RM100,000. A joint venture between glove manufacturer Careplus and GoAuto to assemble vehicles in Seremban, Negeri Sembilan, has allowed the production of Neta V to be sold at RM99,800 – the cheapest EV in the country with a range of up to 380 km.

 

Another national carmaker – Perodua – is scheduled to mass produce electric vehicles by the end of 2025, after showcasing its eMO-II concept recently. It has hinted that its new EV would be priced under RM90,000. The biggest challenge, however, is limited charging infrastructure, which leads to range anxiety – the fear that an EV will not have enough battery juice to reach its destination, leaving its occupants stranded.

That’s why Tesla has pro-actively built its own charging stations before selling its EVs. It has been a chicken-and-egg situation – to build charging infrastructure first or to wait for higher car sales before building the stations. There were 3,171 EV charging units as of the end of 2024’s third quarter, with an initial target of 10,000 charging bays by the end of 2025, before the government delays it to 2030.

 

But the target itself was first announced by Malaysian Green Technology Corp (MGTC) in late 2020. To be able to build only 3,000 or roughly 30% after 4 years (not all the charging stations are working, mind you) screams incompetence. Talk is cheap. It’s easy for the government to say it wanted electric vehicles (EVs) to account for 20% of annual new vehicle sales by 2030.

 

Unlike the Chinese government who took the lead from the beginning, the Malaysian government has left most of the heavy lifting of building charging infrastructure to the private sector, including shopping malls, car makers or even condominium management. The government needs to do more than merely expressing its wishful thinking to have thousands of charging points nationwide to accommodate 500,000 EVs in 2030.

According to the International Renewable Energy Agency (IRENA), approximately 1.3 million charging stations will be needed to support an estimated 38 million electric vehicles (76% of the country’s road vehicles) that will be present in Malaysia by 2050. In the shorter term, IRENA estimates Malaysia will require 150,000 public charging stations by 2030.

 

While 25% of Malaysians surveyed have expressed interest in buying an electric vehicle, driven by fear of rising fuel costs when the government will eventually scrap subsidies for RON95 next year, as well as environmental considerations, nearly 40% of Malaysians said they would still prefer to buy an internal combustion engine (ICE) and a hybrid car next.

 

Those motivated to make the jump of faith are mostly the consumers who are younger, hungry to “look cool” and care about environmental impact. Conservative consumers who remain cautious about EVs are concerned about resale value (57%), access to charging ports (51%) and costly battery maintenance (41%). It makes sense to be worried about second-hand value of EVs.

Unlike property or gold, cars are depreciating asset. The only difference is how fast a second-hand value of a brand drops. Get real, with the exception of Toyota and Honda, every car’s value depreciates at lightning speed. As a result, Toyota takes advantage of its brand to give pathetic specifications, whilst Honda’s quality has been deteriorating (such as Civic’s endless steering rack defects).

 

In general, the rule of thumb is a car loses 20% to 30% of its price value the moment it leaves the showroom. Thereafter, the value drops an estimated 15% for every subsequent year, with continental cars (including Mercedes Benz, BMW and Volkswagen) drop even more. When your car hits the fifth year, it’s common for its price to lose 50% of its value. Even Proton X70 loses its value significantly.

 

Hungry to capture market share and to provide assurance of its reliability in its competition against Honda CR-V and Proton X70, Chinese brands like Haval H6 Hybrid (RM139,800) is giving away 10-year or 1,000,000-km (that’s 1 million) warranty. BYD M6, meanwhile, comes with 8 years or 160,000 kilometers for the battery warranty, and 6 years or 150,000 kilometers for the vehicle.

Assuming BYD M6’s resale value drops to zero at the end of its 8 years battery warranty period, the depreciation is about RM13,750 per year. Compare that with Benz’s average depreciation rate of around 40% in the first three years of ownership (Peugeot 2008 loses a staggering 48% value in 1 year), it’s not hard to see why electric vehicle will remain attractive.

 

It’s not a fair apple-to-apple comparison in comparing Chinese EVs with Japanese ICE cars. That’s because electric vehicle is a new technology different from combustion engine. Crucially, China is dominating the EV market, including the entire supply chain. If the quality of Chinese EVs sucks, Toyota’s exports would not have fallen 34.9% in China, and the sales of all six Japanese automakers would not drop like a rock there.

 

In fact, Japanese automakers suffered the biggest market share losses of any carmakers between 2019 and 2024 in not only China, but also in Singapore, Thailand, Malaysia and Indonesia. It was so bad that Honda and Nissan are now considering a merger. The only segment Toyota isn’t losing is the pickup trucks. While Japan boasted more than a fifth of global car production two decades ago, that figure has now fallen to 11%.

There were 20 million EVs on the road in China last year, followed by Europe (11 million), and the U.S. (5 million). And it was just the beginning as China’s share of the global electric vehicle market reached 76% in October 2024. The best part is the Chinese companies are ready to slash prices to compete even among themselves in a brutal price war for market share.

 

This is good news for consumers because not only EVs would become cheaper over time, its disruption to the traditional internal combustion engine (ICE) market has begun making Japanese carmakers stop increasing their car prices indiscriminately. For example, the price of 1-year-old Honda HR-V has plunged to RM104,000 from RM136,000. Even a Civic RS dropped from RM152,000 to RM115,000 within 1 year.

 

Adding salt to injury, Chinese battery technology will see not only cost reduction, but also faster charging time. In June, BYD and CATL announced that they will soon ship lithium-iron-phosphate (LFP) battery cells that can be charged from zero to 100% in ten minutes. Regardless whether you still prefer conventional engine cars or EVs, the invasion of Chinese EVs has changed the landscape to benefit consumers.

Of course, Anwar government’s move to promote the development of Electric Vehicles – regardless whether it was done with political agenda to cut fuel subsidies or to achieve zero emissions commitment – is indeed a good policy. By welcoming investment from China,the car market traditionally dominated by petrol vehicles is now witnessing a gradual shift in interest towards EVs, which could lead Malaysia to become a manufacturing hub for EV brands in Southeast Asia.

 

Other Articles That May Interest You …

• After Imposing Tariffs On Chinese EVs, Now EU Rushes To Beijing To Talk – But China Has Begun Retaliations
• Europe’s Tariffs On China’s EV Backfires – Volkswagen Closing Factories Before Even Trade War Begins
• From Kingdom Of Bicycles To Automaker Giant – Why Western Automakers Are In Trouble As China Shows Them The Exit
• BYD Beats Tesla Again – How The U.S. Carmaker Lost Its Crown As World’s Top Electric Vehicles Manufacturer
• Sodium-Ion Battery – How China Supercharge Rechargeable Batteries To Dominate The Next Big Technology
• Electric Car As Cheap As $11,000 – How China Beats The U.S. In Electric Vehicles & Leaves Global Brands In The Dust
• Volvo Will Sell Only Electric Cars By 2030 – And You Can Only Buy It Online
• If Proton Has The Quality Of Volkswagen Or Toyota, People Will Not Dump The National Cars
• Third National Car, The Unfinished Business – Why Mahathir Should Wake Up & Stop Hallucinating
• China Geely Introduces Meritocracy – But Handicapped Proton “Bumiputeras” Aren’t Happy
• 80% Cheaper To Take Robo-Taxi – The Next Car You Buy Could Be Your Last

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December 20th, 2024 by financetwitter

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