Kuala lumpur: Malaysia is poised to spearhead electric vehicle (EV) demand growth outside of Vietnam and Thailand, ASEAN's two predominant EV markets. This projection is supported by the country's affluent consumer base and increasing EV competitiveness, according to BMI.

According to BERNAMA News Agency, BMI, a Fitch Solutions company, highlighted Malaysia's robust consumer purchasing power as a key driver for EV adoption in the medium term. This is despite the expiration of tax exemptions for fully imported EVs. With intense competition among Chinese EV brands, Malaysia remains a promising market for EVs. The report noted that by 2025, 86 percent of Malaysian households are expected to earn more than US$10,000 in disposable income, with this figure anticipated to rise to 90 percent by 2030.

BMI noted that while the expiration of tax exemptions might exert some pricing pressure, this will likely be countered by the competitive pricing of Chinese-manufactured EVs, including those made by Tesla. The intense competition among Chinese brands and the improving affordability of EVs are expected to support an increase in the share of new vehicle purchases accounted for by EVs over the medium term.

The report projects that ASEAN passenger electric vehicle sales will surge to nearly 690,000 units by 2030 and 916,997 units by 2035, up from 419,547 units in 2025. This growth reflects an increase in EV penetration, which is expected to reach 22.7 percent of passenger vehicle sales by the end of the forecast period.

'As EV adoption accelerates across Southeast Asia, ASEAN is transitioning from an emerging demand center to a significant manufacturing and supply-chain hub," the report stated. "Strong demographics, rising incomes, and supportive government policies are fueling rapid growth in vehicle electrification. The expansion of Chinese automakers and localization strategies by regional governments are reshaping the competitive landscape.'

BMI further emphasized that while Vietnam and Thailand will remain the largest EV markets in the region, accounting for over 72 percent of ASEAN passenger EV sales in 2026 due to strong policy support and expanded vehicle availability, growth will become more diversified. By 2035, Malaysia and Indonesia are expected to capture a larger share of demand, reducing the combined share of Vietnam and Thailand to 64 percent.

The macro perspective of the report points out that ASEAN's opportunities in the EV industry extend beyond vehicle sales, with the region already being a crucial supplier of battery and EV materials. It highlighted that Indonesia and the Philippines accounted for over 68 percent of global nickel mine production in 2024, with Indonesia emerging as the world's second-largest refined nickel producer.

Additionally, ASEAN has substantial exposure to rare earth elements (REEs). Vietnam accounted for about 20 percent of global REE reserves in 2023, while Myanmar, Thailand, and Malaysia are established REE producers. These resources are vital for the production of permanent-magnet EV motors and advanced vehicle electronics, thereby strengthening ASEAN's strategic importance as automakers seek to diversify supply chains and reduce dependency on concentrated sources of supply.