Proton hopes the government will extend incentives for CBU EVs beyond Dec 31, 2023 – no CKD plans yet –

Earlier today, Proton and electric carmaker smart Automobile Company signed a general distributorship agreement (GDA) which will see Proton sell and service smart vehicles in Malaysia and Thailand.

The smart #1 will be the first smart model to be sold by Proton and we were told that a local launch will take place early in Q4 2023. The electric SUV was first revealed globally in April, built on Geely’s Sustainable Electric Architecture (SEA) and styled by Mercedes-Benz.

The Q4 2023 launch time frame does raise some concerns, as it’s relatively close to the cutoff date for EV incentives announced by the government during the tabling of Budget 2022 (Bajet 2022) last October.

For a brief recap, fully-imported (CBU) EVs are currently exempt from import and excise duties from January 1, 2022 to December 31, 2023, while it’s until December 31, 2025 for locally-assembled (CKD) EVs. Both CBU and CKD EVs are also exempt from road tax until December 31, 2025.

The #1 will arrive as a CBU model and given its planned arrival in early Q4 2023, it will only benefit from EV incentives for a limited amount of time. As such, Proton chairman Datuk Seri Syed Faisal Albar said in his opening speech that he hopes the government will extend the incentive period for CBU EVs beyond the original end date.

“Proton will play a role in Malaysia’s EV industry as well as help the country achieve carbon neutrality target by 2050; together with our other initiatives such as a double-sided solar panel farm at Tanjung Malim. We will however need help to do so, and the government as always, have been proactive in promoting these generation of vehicles,” he said.

“In place now is the policy of 100% duty exemption for CBU electric cars up to December 31, 2023, and until the end of 2025 for CKD electric cars. It is an excellent way to spur investment in the sector, and we thank the government for their generosity. However, for the benefit of building a robust EV industry, we humbly request that these exemptions be extended. This is because in Malaysia, the new energy vehicles industry is still in its infancy and as it is a capital-intensive sector,” he added.

The obvious way to continue enjoying EV incentives beyond 2023 is to assemble the #1 in Malaysia, but Proton deputy CEO Roslan Abdullah explained in a press conference following the signing ceremony that it was still too early to consider local assembly. This is because the #1 has yet to go on sale here, making it difficult to gauge demand, which is very important when it comes to setting up CKD operations.

“Something we look at is volume because when you talk about CKD operations, it’s always a volume game business to justify in terms of the investment that we have to put up in Malaysia and on how that we should focus on the right-hand drive market. It’s too early for us to talk [about CKD] because what we want is to bring the smart #1 and launch it in Malaysia first then we can talk when the time comes [to consider CKD operations],” Roslan said in response to a question from the media.

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