Under the current tax structure, CBU EVs are exempted from import and excise duties till the end of 2023, whilst CKD EVs will enjoy the same tax cuts until end-2025.

Though these tax cuts are already proving to be effective and will definitely spur further EV adoption, Mercedes-Benz Malaysia (MBM) says that more time is needed, if the Government is serious about boosting CKD production of EVs.

To recap, these are the current tax incentives for BEVs:

Also read: Budget 2022: Expiry date of 0% import and excise tax for BEVs - 2023 for CBUs, 2025 for CKDs

Vice-President Michael Jopp stated, “(The tax incentives) certainly help right now and we’re very confident for this year, and for next year,”

“(The Government) have taken a bold step now, from our perspective, they cannot stop after 2 years, if they take the position on electric mobility seriously.”

Sagree Sardien, the President and CEO of Mercedes-Benz Malaysia said, “It’s a good first step for the Government to have these incentives in place until 2023. We are very hopeful and MBM that the Government considers extending this,”

Sardien added, “And for the very reason, not just about having an incentive for the customer, but for actually boosting the platform for both CBU and CKD EVs in the local market,”

Also read: Tax-free EVs? MAA clarifies condition of Sales Tax exemption for EVs in Malaysia

Nonetheless, while MBM remains hopeful and optimistic that the Government will extend the tax incentives, they will continue to implement their CBU and CKD strategies regardless of the outcome.

When asked if MBM already has CKD plans in place, Sardien explained, “For the short term, we always have to evaluate the feasibility of bringing in an EV, and we also have to be mindful of our progress in terms of infrastructure etc,”

Also read: Mercedes-Benz Malaysia: EQS is not quite a replacement for the S-Class, but it's the future

“In the long term, definitely it has to be the solution - that we have localisation of EV production in the country. The question, of course, when is that tipping point and which vehicle is it that we bring in.”

Jopp offered a more candid reply, “The challenge is predicting the volume from a long-term perspective and going back to the investment required. We’re just not there yet.”

Simply put, the large investments needed to upgrade plant capacity, tooling and resources for CKD EV production need to be justified by the long-term returns in terms of sales. 

Also read: Confirmed: 4 years free road tax for EVs, from 1-Jan 2022 to 31-Dec 2025

And of course, pricing EVs competitively are highly dependent on incentives, at least for now. And that's before considering inflationary pressure, higher energy cost, and part shortages. 

As it stands, 2 years may be too soon for even an established manufacturer like MBM to fully deploy within that time. Thus extending CBU incentives will offer a smoother transition to CKD EVs whilst ensuring Malaysian have access to the newest EV models moving forward.