KUALA LUMPUR, July 3 (Xinhua) -- Despite softening car sales in Malaysia, analysts foresee electric vehicles (EVs) continuing to gain traction in the country.

MIDF Research said in a report on Wednesday that electrification continues to gain momentum in Malaysia, as while overall total industry volume (TIV) is softening, government data as of May showed that the EV segment remains a bright spot, up 58.5 percent year-on-year for the year to date (January to May) and 69.3 percent year-on-year in May, with 4,152 units registered.

It noted that local brand Proton is on track to begin local assembly of the e.MAS 7 at its new Tanjung Malim EV plant by year-end, while Perodua is preparing to launch its first EV (a B-segment hatchback) in the fourth quarter of 2025.

It also noted that EV charging infrastructure is expanding, with over 4,000 chargers now installed, though still short of the 10,000-unit year-end target.

TA Securities also said in its recent report that the EV momentum is expected to continue, with more models set to arrive in the second half of 2025 and into 2026, offering consumers greater accessibility and choice.

Currently, consumers have access to more than 40 EV models, reflecting a rapidly expanding portfolio.

TA Securities said that Chinese automakers such as BYD, Chery, Xpeng, and Geely continue to expand their footprint by offering feature-rich models at competitive prices.

At the same time, premium brands like BMW, Mercedes-Benz, and Porsche are stepping up efforts to introduce their electric lineups, aiming to capture early ground in the luxury EV segment.

Overall, the research house sees that the second-half automotive sales may see a temporary boost, particularly in EVs, as consumers look to secure current tax exemptions before they expire at the end of December 2025. This pull-forward demand could benefit brands with competitive EV offerings.

However, it concurred that uncertainties surrounding the potential introduction of EV road tax may lead some buyers to hold off.

It opined that the removal of the 100,000 ringgit (23,767 U.S. dollars) price floor for imported EVs, which is also set to end in December 2025, is expected to attract more low-cost foreign models, intensifying price competition and squeezing margins.

"While a short-term uplift is possible, the broader outlook remains cautious due to policy risks, affordability concerns, and heightened market competition," said the research house.

Maybank Investment Bank also said in its recent report that EV-related investments began gaining traction in the first half of 2025 in Malaysia as the current exemptions on import and excise duties for completely knocked down (CBU) EVs, as well as restrictions on importing CBU EVs priced below 100,000 ringgit, are set to expire at end-2025.

The research house opined that this momentum is expected to continue into the second half. ■