BYD’s decision shows Malaysia the need to grow beyond CKD

Malaysia has been building cars for more than four decades, but the country's automotive industry may need to consider a shift beyond producing completely knocked-down (CKD) vehicles. This was highlighted when Chinese EV giant BYD announced it would not proceed with its planned factory in Tanjong Malim, but remained committed to local assembly.

BYD is now exploring partnerships with existing Malaysian assembly partners, which is an important distinction. The country has a long history of CKD assembly, with Toyota starting production in 1968 and other brands following suit. Over the years, this has created a robust automotive ecosystem in Malaysia, with Malaysian engineers, technicians, and suppliers benefiting from the investment.

BYD's decision to avoid building another factory may actually validate the value of Malaysia's existing capabilities. Instead of dismissing the potential of what already exists, BYD's move could encourage the country to focus on becoming a hub for assembling vehicles for multiple manufacturers. This would require Malaysia to develop expertise in manufacturing power electronics, battery management systems, automotive semiconductors, and other related technologies.

By becoming a flexible Asean manufacturing centre, Malaysia could offer a more efficient alternative to other countries, rather than simply producing vehicles for individual brands.