BYD Malaysia CKD Plans Halted Due to MITI’s Strict Terms – Report

BYD may have been on the cusp of setting up its first Completely Knocked Down (CKD) production plant here in Malaysia, located in Tanjung Malim, Perak. However, since the initial announcement back in Aug last year, there has been no update given on its progress, and the reason for that silence might have been revealed.

According to a news report from The Edge, BYD is said to be relooking at its plans to set up a new CKD plant here as the Chinese NEV marque reportedly cannot agree with the strict terms set by the Ministry of Investment, Trade, and Industry (MITI).

80% Export, 20% Local Consumption

As per said report, the bone in contention for BYD is with the strict terms set by MITI, which would reportedly see them exporting as much as 80% of the vehicles produced at this plant.

What’s more jarring is that the remaining 20% of the cars produced here have to be sold for local consumption, priced at above RM200,000 per unit.

“These (the 80% export figure and 20% production of EVs at above RM200,000 for the local market) were the terms they couldn’t agree on,” MITI minister Datuk Seri Johari Abdul Ghani told The Edge in a brief phone conversation.

The minister continued that these strict requirements are being set to protect the local automotive industry, which currently provides employment to some 700,000 people, and particularly both the national automakers, Proton and Perodua.

“You must also remember that both Proton and Perodua have 50% local content in their cars, and Proton sells about 150,000 cars a year [while] Perodua sells about 350,000, which is a lot, and these two companies built much of the existing ecosystem for the auto industry in Malaysia. So, we have to protect them,” he continued.

Other EV CKD Plans Affected?

With BYD now reportedly making a U-turn on its CKD plant investments, it remains to be seen whether this will affect several other Chinese automakers like Xpeng and Zeekr, who are about to set their own CKD operations here in Malaysia following the end of the tax exemption on fully-imported (CBU) EVs this year.

Having said that, both Xpeng and Zeekr are pursuing their CKD plans with a local partner involved, with the former partnering with EP Manufacturing Berhad (EPMB), while the latter is reportedly going to use Proton’s newly-opened EV plant in Tanjung Malim.

Following the termination of these tax incentives, the Malaysian government has imposed a new minimum pricing of RM250,000 for CBU EVs, which not only covers new brands but also existing ones too, hence pushing many automakers to pursue their own CKD plans here.

But now that MITI has reportedly set a new term for CKD EVs to be priced above RM200,000, the marginal price difference of RM50,000 could easily turn all these Chinese brands away from investing here.