Globally, electric cars got cheaper in 2025. In Malaysia, the country that grew its EV market by 109 percent last year, the next twelve months look set to push them the other way.
Editor
Kai T chevron_right
Table of Contents
What the IEA actually found
The International Energy Agency's Global EV Outlook 2026, released on 20 May, says one in four cars sold worldwide last year was electric, with sales topping 20 million units and battery prices falling 8 percent on cheaper lithium iron phosphate (LFP) chemistry. Rest of World's reporting on the report calls out the United States as the clearest outlier: EV penetration there is stuck around 10 percent, and Q4 2025 new EV sales were 45 percent lower than a year earlier after Washington killed the federal tax credit and removed fuel efficiency penalties for automakers.
Canada saw the same pattern, with the EV share of new cars sliding from 17 percent in 2024 to 11 percent in 2025 after Ottawa let its rebate programme lapse. Meanwhile, affordable Chinese brands shut out of North America have been the main mover everywhere else, claiming up to 85 percent of EV market share in some countries. The IEA singles out Vietnam, where EV penetration cleared 40 percent in 2025 on the back of VinFast's small, low cost VF3 and VF5 models, with the Hai Phong plant rolling out its 200,000th unit on the final day of the year.
Why Malaysia is moving in the opposite direction
Malaysia's 2025 looked, on paper, like the global story plus a little extra. The Malaysian Automotive Association recorded 30,848 new EV registrations, up 109 percent from 14,766 the year before. BYD led with 14,407 units, Proton followed with 8,890 (the e.MAS 7 alone did 8,677), and Tesla landed third on 7,282. Most of that growth came from imported, sub-RM150,000 Chinese models that sit cleanly inside the segment the IEA describes as mass-market.
That bracket is the one MITI's new rules will close. From 1 July 2026, every fully imported (CBU) electric car must clear a minimum CIF value of RM200,000 and produce at least 180 kW (245 PS or 241 hp), which industry analysts expect to push the selling price floor north of RM300,000. Ready stock and cars already in transit are exempt, so showrooms will run down current inventory first. After that, the cheapest CBU options that drove last year's sales numbers, including most of BYD's volume sellers, will not legally be importable in their current form. We covered the wider MITI shift and BYD's local assembly response in an earlier piece on the new EV rules.
What this changes for Malaysian buyers
If you have been waiting on a Chinese EV under RM200,000, the calendar is now the most important spec. After 1 July, the same model can either be repositioned as a CKD car assembled locally, repriced upward to clear the new threshold, or pulled from the Malaysian range altogether. BYD's CKD arrangement, which limits domestic sales to 10,000 units a year (20 percent of its output) while requiring 80 percent to be exported, is the template MITI seems to want every brand to follow.
For Proton, the rules play the other way. The e.MAS 7, locally assembled and priced under RM150,000, was already Malaysia's best selling EV last year. Removing cheap imported rivals widens its runway. Tesla's Model Y and Model 3 sit above the new RM200,000 floor and continue to qualify, but second tier Chinese brands like Zeekr, Denza, Geely and the smaller players that joined the top 20 chart in late 2025 have a harder choice to make.
The view from the cheap seats
The contrast with Vietnam is what makes this story uncomfortable. Hanoi opted to back a domestic champion (VinFast) on small, affordable models and let imports compete on the same terms. That cleared the way for cheap EVs to land at scale, and EV penetration crossed 40 percent. Malaysia is also backing a domestic champion (Proton), but doing it by shutting the door on the imported sub-RM200,000 segment that grew the market in the first place. Whether buyers wait out the new floor, swap into CKD options, or skip the EV decision until prices reset is what the second half of this year will reveal.
The IEA's call for 2026 is that government support for EV buying will fall to roughly zero in the United States. In Malaysia, the support is still there, but the ladder up to it just got taller.
Cover photo by Andrew Roberts on Unsplash. In-body charger photo by CHUTTERSNAP on Unsplash.