BYD is currently the go-to brand for anyone looking to dip their toes into the world of battery electric vehicles. It’s the poor man’s Tesla, and we meant it in a good way. You get truly world-class battery technology, at a fraction of the price. The catch is of course, poorer software and user interface – which is the compromise you have to make for an otherwise very value-for-money package.

The Chinese brand is currently the No.1 selling EV brand in Malaysia, with nearly 1,400 units registered between January to July 2023. To put the numbers in context, third-tier Japanese brands like Nissan sells 4x the amount in the same period, but BYD’s numbers are close to Volkswagen’s circa 1,700 units.

Much of BYD’s growth today has to do with favourable tailwinds, assisted by 100 percent waiver on import and excise tax, as well as road tax.

There are two maxims that all savvy investors know – The first is “A rising tide lifts all boats.” The second is “Past performance does not guarantee future results.”

Just because BYD is growing today doesn’t mean that BYD will continue to enjoy free kicks in the coming years, because financial incentives for imported battery EVs will end by 31-December 2025 (after two-year extension approved in Budget 2023).

What happens to the local EV ecosystem post-2025 is still unclear. If death and taxes are inevitable, so is Malaysia’s preference for local assembly (CKD).

Any car marque, regardless of whether it’s an EV or not, cannot hope to achieve reasonable market penetration in Malaysia (or the rest of ASEAN) if it doesn’t invest in CKD, no matter how strong their brand image is. Just ask Audi and Lexus.

The only exception are commercial vehicles like pick-up trucks, which are exempt from excise tax.

If BYD is serious about presenting battery EVs as a credible alternative to mainstream combustion engine cars in Malaysia, it needs to get serious about CKD.

BYD has since announced its plans to setup a 150,000 cars per year plant in Rayong, Thailand by 2024. While it’s possible to source cars from Thailand, it will be subjected to the maximum applicable (between 60% to 105%) excise tax. This is why there are no high-sales volume market leading models that are imported from Thailand, excise tax-exempted trucks aside.

Right now, it’s hard to tell if BYD is merely a flash-in-the-pan Chinese marque looking to milk Malaysia’s EV incentives while it can, or if it’s a brand that is committed to stay in Malaysia for the long run.

We speak to Eagle Zhao, Managing Director of BYD Malaysia, on the company’s plans for Malaysia. Note that BYD Malaysia is an entirely different entity from distributor Sime Darby Beyond Auto. BYD Malaysia is a wholly owned subsidiary of the Shenzhen-based BYD Auto.

At this point, we should also point out that BYD Malaysia’s activities goes beyond just passenger cars sold by Sime Darby. The company also has an electric commercial van project with CSH Alliance’s subsidiary Alliance EV.

When asked why BYD Malaysia keeps two unrelated entities as its local partners, Zhao explained that this is BYD’s strategic approach. It believes that keeping the commercial electric vehicles business separate from passenger cars is the most effective way to achieve operational efficiency.

Earlier this year, CSH Alliance announced that its subsidiary Alliance EV (AEV) has obtained the manufacturing license to locally assemble the BYD T3 electric van at DRB-Hicom’s Automotive Hi-Tech Valley in Tanjung Malim, Perak.

Zhao didn’t elaborate more beyond what’s already announced by the local partner.

“We will share more updates once official plans are made,” he said.

Regarding the Sime Darby side of the passenger car business, Zhao acknowledged that CKD is a must, but stopped short of making a firm commitment.

“BYD has always been committed to expanding its presence in Southeast Asia, and Malaysia is no exception, as the country's interest in electric vehicles continues to grow steadily. While we have announced CKD plans for Thailand, we are also actively considering similar plans for Malaysia.

“CKD assembly in Malaysia holds significant potential for us due to the country's strategic location, skilled workforce, and growing interest in electric mobility. We are currently evaluating the possibility of establishing CKD operations in Malaysia,” he said.

Looking at the current progress, the first locally assembled BYD model will most likely be a commercial van by Alliance EV rather than a passenger car by Sime Darby Beyond Auto.

As for the company’s plans beyond 2025, when tax incentives end, Zhao said “BYD is focused on establishing a sustainable and competitive presence in Malaysia's automotive landscape. Our long-term strategy encompasses several key aspects, including CKD initiatives and strategic partnerships. We recognize the importance of adapting to changing market conditions and regulations, and we are committed to offering attractive options for Malaysian customers post-2025, ensuring that our EVs remain accessible and appealing within the evolving framework.”

If you think that’s a polite answer that doesn’t really say much, you’re not wrong but to be fair, what else can we expect BYD Malaysia to say when so many critical points – fuel subsidy rationalization, incentives for renewable energy transition, and tax structure – are still unclear.

There have been talks about revising road tax structure for EVs but nothing is certain yet. More important than road tax is the excise duty structure, which many seem to forget that is also based on engine capacity, which is obviously not applicable to EVs.

Despite its position as the No.1 EV brand here, BYD has yet to make any contributions to establishing public charging infrastructure. Other leading brands with EV products - Porsche, Mercedes-Benz, BMW, MINI, even Smart and Tesla, have contributed to establishing publicly accessible DC fast charging facilities.

When asked about BYD Malaysia’s contribution to Malaysia, Zhao said “We maintain a close partnership with our local distributor, Sime Darby Motors, to explore opportunities for local contributions. Together, we are working to explore and address the various facets of Malaysia's evolving electric vehicle ecosystem. We remain receptive to suggestions and avenues through which we can make meaningful contributions.”

Sime Darby’s subsidiary company Kineta offers various EV charging solutions – including home charging and DC fast charging - but many BYD dealers still rely on public charging infrastructure setup by others. For many brands, investing in charging infrastructure is a basic requirement a dealer is allowed to sell an EV product.

BYD currently two models in Malaysia – the Dolphin is priced from RM 100,530 to RM 125,530, while the Atto 3 is priced from RM 150,430 to RM 168,430. Prices are on-the-road excluding insurance.

A third model – the BYD Seal – will be launched before the year ends.