Chinese EV carmakers bring their own parts, and Malaysian suppliers are watching from the kerb

Malaysia's car-parts manufacturers could be left out of the electric vehicle (EV) boom, as Chinese automakers prioritize imported components and their own suppliers, according to the South China Morning Post (SCMP). This trend extends to suppliers in Indonesia and Thailand, who face reduced demand for parts in gasoline and diesel vehicles amidst high entry barriers into EV supply chains.

"The supply chain is very different between Japanese autos and Chinese EVs," Bhima Yudhistira Adhinegara, executive director of the Centre of Economic and Law Studies in Jakarta, Indonesia, told the Hong Kong newspaper.

Malaysia's own experience illustrates the complexity of the situation. BYD, a Chinese EV manufacturer, abandoned plans for a manufacturing plant in Tanjung Malim due to disagreements over export quotas and pricing conditions imposed by Malaysia's Ministry of Investment, Trade and Industry. The company subsequently partnered with local assembler Inokom to assemble passenger vehicles at an existing facility in Kulim, Kedah.

Local content in these EVs remains limited, at 20 to 30 percent compared to up to 70 percent for foreign-branded cars with conventional engines.

The Malaysian government has attempted to address this gap through initiatives such as the Malaysian Investment Development Authority's collaboration with Chery in May 2025. This partnership resulted in four agreements focusing on components, technology transfer, and joint investment. Analysts quoted by the SCMP suggest that servicing and hybrid vehicles, which combine petrol engines with electric motors, may offer a potential avenue for growth.

Aiman Abdullah, managing editor of Motoring Malaysia, notes that Malaysia's automotive industry is gradually building local engineering expertise through electrification programs, and that experience with high-voltage systems in hybrids could facilitate a shift into EV components.

However, suppliers still require clearer policy guidance from the government and more stable investments from automakers, according to Aiman. Establishing a fund to assist smaller firms in entering the EV market could be a viable solution, as smaller companies possess the necessary vision and technical know-how but lack the financial resources to break into EVs.

Krungsri Research points out that Thai suppliers face cost and technology barriers in the region. Bhima Adhinegara recommends that Jakarta utilize local-content rules to stimulate EV investments in small manufacturers.

Servicing also presents an opportunity for Malaysia, given its established ecosystem for conventional vehicle repairs like bodywork, tires, and suspension. Teoh Jiun Ee, co-founder of used-car platform Carsome and CEO of Carsome Academy, highlights that Malaysia excels in conventional repairs but struggles with specialized services for EVs, particularly high-voltage systems, battery assessments, and model-specific components.

Carsome can inspect EVs but cannot perform repairs or replace individual battery modules, instead referring such matters to manufacturers, especially for vehicles still under warranty. Teoh emphasizes the potential for developing a more mature used-EV ecosystem in Malaysia, ensuring consistent and safe assessments of vehicles and increasing buyer confidence in the condition of used cars.