Hybrid vehicle tax incentive for Malaysia. Proton EVs soon?

It's been a very interesting week for the Malaysian auto industry. It all started on 29th August, when Prime Minister Abdullah Ahmad Badawi revealed in his 2009 budget speech that as part of the government's "natural energy plan," a series of incentives are unveiled to ensure long term energy security for Malaysia, which is expected to be a net oil importer by the next decade. Among the incentives are exemption of 100% import duty and 50% excise duty levied on all fully imported hybrid cars below 2000cc. The exemption however is not indefinate, and will only last for two years, after which the government expects local assembly operations of such cars.


This would mean that the fully imported Honda Civic hybrid, which has sold in negligible numbers due to its RM 162k price tag (higher than a 2.4-litre locally built Accord) will see its price reduced quite significantly. Honda has yet to announce its new pricing but my guess is it will definately be higher than the Civic 2.0-litre price of RM 128.8k. In the USA, the Civic Hybrid starts at USD 23k, about 50% higher than the base model Civic sedan which starts at USD 15k, while the Accord starts at USD 20k.

According to local motoring journos, UMW Toyota is testing 2 units of the Prius. This development should be good news to them but considering the fact that the next generation Prius will be unveiled in the January 2009 Detroit Motor Show, it is unlikely that the local Toyota distributor will be launching the current Prius. The next 2009 Kuala Lumpur International Motor Show is slated between 29 May to 7 June, with an environmental theme "We Care." With the motor show event coming only 5 months after the Prius global debut in Detroit, it doesn't take much to figure out that the 3rd gen Prius could be first unveiled to the Asia Pacific market in Kuala Lumpur. Currently there are 5 privately imported Prius in Malaysia. Judging by the breakdown prices revealed by Mr. Harry Boswell, owner of the first Prius in Malaysia, the car should only cost about RM120k before tax.

Thoughts on Malaysia's "energy security policy" on hybrid vehicles.
Currently there are only 2 countries in the world manufacturing hybrid vehicles - Japan and China. USA, Thailand and Australia are also set to begin hybrid vehicle assembly pretty soon. The case in USA was because the collapse of truck and SUV market has forced Toyota's Missippi plant to retool for smaller cars or face closure. Thailand is one of the key export hubs for Toyota, and the Thai government has a very ambitious plan transform the current truck export hub into an eco-car export hub.

Toyota President Katsuaki Watanabe and Australian Prime Minister Kevin Rudd

Australia enticed manufacturers with a "AUD 2 billion Green Car Innovation Fund." A high powered government delegation comprising of Prime Minister Kevin Rudd and Senator Kim Carr flew to Japan for negotiations with Toyota's President Katsuaki Watanabe. All the above countries mentioned have existing infrastructure and a vibrant automotive parts manufacturing industry to support local assembly of hybrid cars. Malaysia on the other hand has to be realistic that it still lacks the necessary supply network.

Batteries make up a large portion of hybrid car's cost. Who is going to supply the hybrid battery locally? Hybrid battery packs for both the Civic Hybrid and Prius are supplied by Panasonic. Is the Malaysian Panasonic plant capable of manufacturing hybrid batteries in two years? There wouldn't be any cost savings if so many key components are still being imported. In fact, cost could be even higher than if the vehicles is to be imported! Also, what happens when the battery reaches the end of the lifespan? Batteries are toxic and governments in many developed countries require manufacturers to support setup of battery recycling centers as well. Hybrid vehicles have far more complicated wiring looms and their assembly process differs from that of a conventional car. I highly doubt the aging Toyota plant in Shah Alam or even the more modern Honda plant in Alor Gajah is capable of putting them together in large scale, without substantial investment in additional tools or maybe even reconfiguring the assembly lines.

Honda has already mention that there is no plan to locally assemble to Civic Hybrid. So in two years time, with no manufacturers doing CKD operations for hybrid vehicle, what will the government do? Backtrack on their policy like they also do?

Proton's EV venture with Detroit Electric

Image from MTM and The Star

Two days later, the Malaysian PM again surprised the public by appearing in the National Independence Day parade in a electric powered Proton Persona, retrofitted with an EV powertrain by Detroit Electric.

A little history on Detroit Electric

Before the Great Depression of 1927, Detroit based Anderson Electric Car Company produced EVs under the brand Detroit Electric between 1907 and 1939. It was the car of choice for the rich and famous, particularly well off ladies. Remember this was a time before electric starters and petrol engine cars have to be cranked by hand, and have their valve seats oiled before starting. With the EV, you just push a button and drive off. It also came at a price. Detroit Electric models sells at over USD 2000 while the Ford Model T only retails at USD 600.

An early model Detroit Electric. Image from TechHerald.
Even Henry Ford's wife, Clara Ford drove a Detroit Electric instead of her husbands more "mass-market" models. Other celebrity owners of that time include J.D. Rockefeller Jr., one of the richest families in the world at the time and of course Mr. light bulb inventor himself Thomas Edison. Think of it as the celebrity Prius of that time. They say fashion repeats itself, seems that it extends to cars as well!

In February this year, the Detroit Electric brand was given a new lease of life early this year by a JV between US bay-area based ZAP and Chinese bus and aspiring car manufacturer Youngman Automobile. The deal was put together by former Lotus Engineering CEO (not Lotus Cars) British national Albert Lam. The company aims to market EVs as "early as 2009", including family sedans and a 12-meter electric bus.

ZAP is a EV developer that has a few running prototypes, including en EV sports car; Alias, which it is taking deposits of USD 1k. The video below is a sample of ZAP's products.


Youngman Automobile is an established bus manufacturer in China. The ambitious company now hopes to jump into the passenger car market. Early last year Youngman had an intellectual property rights agreement with Proton to sell 30,000 units of re-badged versions of Proton Gen.2 hatch under the Youngman brand in China.

Proton on the other hand, needs a clean emission engine if it is to continue exporting to Europe and other developed markets as the impending implementation of Euro5 emission regulation will pose a strong challenge to its engine based on archaic technology. It lacks efficient direct injection petrol or clean diesel engines, which are highly critical for success in Europe. Proton's CPS Campro engines are still very far behind Japanese and Korean variable valve timing and lean burn engines. It also lacks efficient CVT transmission as it currently has to make do with outdated Mitsubishi transmissions which are not properly matched to Proton's engine characteristics.

Proton cannot develop hybrids on its own even though subsidiary Lotus have earlier previewed a Gen.2 EVE Hybrid prototype as neither Lotus nor Proton have the right "clout" for strong negotiations with battery suppliers, which are too busy entertaining the big boys from Japan, Europe and US. Detroit Electric offers a good opportunity for Proton side step its current problems.

Detroit Electric hopes to sell 30,000 vehicles worldwide starting 2009. If the Proton Persona EV deal goes through, the company estimates a price tag of RM80k. There are many other interesting bits regarding the latest EV push not just in Malaysia but around the world. For EVs to succeed, it will require more than just installation of charging stations, but let's leave it for another post.

It should also be remembered that Proton has also announced plans to release NGV (CNG) models. Insider news indicate the projects are already in fairly advance stage and the last I heard, they are talking to a few suppliers. Expect NGV versions of Saga and Persona to be released soon. These OE engineered NGVs should fare better than many after-market conversions, which I have always been doubtful of their work, particularly on modern electronic fuel injected engines. Installation of the heavy CNG tank at the trunk alters the weight balance of the vehicle and thus critical airbag and ABS sensors must be recalibrated. Sections of the trunk must also be strengthened to resist rust and metal fatigue.


Concerns on long term viability of EV and hybrid batteries should be laid to rest. Talking about lifespan of NiMh car batteries will only make one sound ignorant. The entire taxi fleet of Vancouver, Canada are made up of hybrid cars, mainly Toyota Prius. They often clock up to 300,000km with no problems. One car went over 400,000km before being shipped back to Toyota's office in Japan for further study. In Australia, another Prius taxi covered 500,000km before requiring a new battery. The newer generation lithium ion batteries are yet to be proven extensively but there is not much reason to doubt otherwise.

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