26/09/2025

FRIDAY | SEPT 26, 2025

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EV owners to pay RM20-RM850 in road tax next year o Tiered rates designed to make electric vehicles more affordable, but experts warn policy risks favouring wealthier buyers unless backed by subsidies and emissions-based taxation

WHAT TO EXPECT Electric vehicle (EV) taxes after 2025

From exemption to taxation 2022–2025 : EVs were exempted from road tax, along with import and excise duty exemptions. From 2026 : Road tax will return under a new tiered system based on motor output.

Ű BY FAIZ RUZMAN newsdesk@thesundaily.com

aligns with Malaysia’s Paris Agreement pledge to cut greenhouse gas intensity by 45% by 2030. “Since EVs do not have engines, using motor power (kW) is globally standard. But against cubic centimetres-based ICE rates, it can feel like an ‘apple to orange’ comparison. “ICE owners may feel unfairly treated unless the government explains this as part of a bigger plan to shift towards emissions-based taxation.” She added that lower EV rates should only be a temporary incentive. “If the gap is too wide, it distorts the market. Over time, Malaysia must move towards emissions-based taxation, which is both fairer and better for the environment.” UiTM environmental economist Assoc Prof Dr J.S. Keshminder said the tiered structure, which charges higher rates for powerful EVs, currently benefits high-income households who dominate the market. “The fairness question will only be answered once the government introduces complementary policies to help middle income households, such as targeted subsidies and more public charging stations.” He noted that while wealthier buyers may be spurred on by tax savings, many middle-class Malaysians remain deterred by high upfront prices and range anxiety. “The success of this framework depends on a holistic approach that makes EVs genuinely accessible.” Keshminder also urged the government to abandon capacity-based taxation altogether. “It is outdated if our end goal is to reduce pollution. An emissions-based model would protect public health and make our auto industry more competitive.” The government first introduced full exemptions on EV road tax, import duty and excise duty in 2022 to spur adoption. These will end on Dec 31 with the new rates taking effect the next day. Road tax will start at RM20 for the smallest entry-level models and rise to RM850 for high-powered EVs, depending on motor output.

ICE vehicles: Based on engine capacity (cc) → larger engines mean higher tax. EVs : Based on motor power output (kW) → higher output means higher tax. EV vs ICE — tax calculation

PETALING JAYA: Malaysians switching to electric vehicles (EVs) will soon pay as little as RM20 – or as much as RM850 – in annual road tax under a new system starting in 2026, a move hailed as fairer by some but criticised as confusing and tilted towards the wealthy. While the revised framework is seen as more affordable than the old formula, observers said its real impact will hinge on how well it is supported by infrastructure, fiscal incentives and ultimately a longer-term shift towards emissions-based taxation. Malaysia EV Owners Club president Datuk Shahrol Halmi said members were “pleasantly surprised” at how much the new rates had been cut compared with pre-2022 levels. “The Transport Ministry is using an escalating scale that links tax to motor power, which broadly tracks EV prices. Luxury EVs with higher output will pay more, while models in the affordable range, such as the BYD Atto 2 with its 130kW motor, will be taxed just RM120 a year,” he said. He noted that the road tax in Malaysia functions less as a direct road maintenance fee and more like a “wealth tax”. “The revised structure announced in June last year is clearly meant to nudge motorists towards EVs, with lower rates compared with similarly priced petrol vehicles.” For example, Shahrol said a Proton X70 SUV would attract roughly twice the annual tax of Proton e.MAS 7 electric SUV, which comes in at about RM180 a year. The difference, he explained, lies in how vehicles are assessed: internal combustion engine (ICE) cars are taxed on engine capacity, while EVs are taxed on motor output. “They are two separate systems and the Road Transport Department must explain this clearly to consumers.” USM transport expert Assoc Prof Dr Nur Sabahiah Abdul Sukor said the revised structure

Public sentiment (Survey of 35 EV owners) Nearly half of respondents were BYD and Tesla owners.

25 respondents viewed the new tax as fair or manageable, while 10 were critical , mainly over steep jumps for high-powered EVs.

“Mine is only RM120, which is fine. But for higher-powered models, it is crazy. You do not drive them at full capacity anyway. ” - Joshua Chong, 28.

“The pricing mechanism is fair because EV owners are not penalised for high powered motors, since EVs naturally have higher outputs. ” - Riyadh Ashiblie, 30.

Divided opinions from drivers on revised system

Graphics by Faiz Ruzman

PETALING JAYA: EV owners are sharply divided over Malaysia’s new road tax structure – with some calling it fairer and overdue, while others slamming it as arbitrary, confusing and stacked against high-powered models. theSun conducted a survey over the past few days to gauge views among EV drivers as the revised system, which replaces the current exemption, takes effect in 2026. Responses were received from participants in their mid-30s, most of whom are working professionals,

including IT executives, brokers and managers. Owners of BYD and Tesla accounted for nearly half of the respondents (45.7%), followed by Proton e.MAS (14.3%), with the rest spread across BMW, Volvo, Xpeng, Zeekr and MG. Many said they switched from internal combustion engine (ICE) vehicles due to cost efficiency, lower maintenance and advanced technology. Most described the rates as fair and more affordable, some were critical, system analysts,

while others were less convinced that the rates are fair. The debate also questioned whether Malaysia was serious about a clearner and more sustainable transport future. An MG4 owner and software project manager, Riyadh Ashiblie, 30, said the revised rates offers a fairer reflection of ownership costs. “The pricing mechanism seems fair because EV owners are not penalised for high-powered motors, since EVs naturally have higher outputs. “Everyone should pay their share of road tax, so I’m fine with the

exemption ending next year,” he said, adding that ICE owners already enjoy government fuel subsidies that EV drivers do not. Hyundai Ioniq 5 owner Joshua Chong, 28, said his rate of RM120 was manageable but questioned disparities between variants. “For higher-powered models, it is crazy. You do not drive them at full capacity. Maybe manufacturers should rethink whether such high powered models are still necessary,” he said, suggesting pricing be factored into the formula.

Business manager and BYD Seal owner Kin Wai, 39, argued that horsepower was the wrong benchmark. He proposed alternatives such as battery size, kerb weight or wheelbase. Meanwhile, Mercedes-Benz EQE 500 SUV owner YJ, 30, said tax should be pegged to actual usage. “A better way would be taxation based on mileage, with odometer submissions. Another option is a levy on tyres, since heavier users naturally wear out roads faster.” – By FAIZ RUZMAN