Malaysia’s drive to expand the use of electric vehicles could slow down as recent petrol subsidy changes reduce the cost advantage of switching from fuel-powered cars, according to a report by Kenanga Research, Business Today reported.
The research house said the new targeted RON95 subsidy mechanism, which has lowered the pump price to RM1.99 per litre for eligible Malaysians, may weaken the financial motivation for middle- and lower-income groups to shift from internal combustion engine vehicles to battery electric vehicles.
Under the current system, most Malaysians are entitled to subsidised fuel capped at 300 litres per month through MyKad verification. Analysts say this effectively reduces the overall cost of owning petrol-powered cars, making them more attractive than electric vehicles.
Kenanga noted that the subsidy could delay the pace of transition, estimating that it may take at least five more years for electric vehicle adoption to gain stronger momentum and for petrol vehicle sales to reach their peak. The report said that, for now, many consumers have less reason to move away from conventional vehicles.
Electric vehicle sales have grown sharply in recent years, rising from just 274 units in 2021 to 44,800 units in 2025, accounting for 5.5 percent of total vehicle sales. However, analysts believe growth could level off if petrol prices remain affordable.
Infrastructure remains another concern. The government has set a target of installing 10,000 public charging stations nationwide. As of February 2026, 5,624 units have been installed, or about 56 percent of the target. While the rollout of fast chargers has surpassed its goal with 1,923 units in place, the number of slower AC chargers stands at around 40 percent of the 8,500-unit target.
Malaysia aims for electric vehicles to make up 20 percent of new vehicle sales by 2030 and 80 percent, including hybrids, by 2050.
Meanwhile, competition among national carmakers is intensifying. The Proton e.MAS 5 has received more than 10,000 bookings and helped Proton capture a 33 percent market share in January 2026. Perodua is preparing to launch an updated Myvi model in 2026, which is expected to include a hybrid or fully electric option. The company is targeting a 60 percent localisation rate by mid-year to keep prices competitive.
Kenanga has maintained a neutral outlook on the automotive sector for 2026. While the broader economic environment and a stable Overnight Policy Rate provide support, the firm said strong price competition and the continued impact of fuel subsidies are likely to keep petrol vehicles dominant for at least the next five years.
The research house identified MBM Resources, linked to the affordable Perodua brand, and Sime Darby, which is benefiting from stronger industrial margins and the integration of UMW, as its top sector picks.
