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Kuala Lumpur: The electric vehicle (EV) momentum is sustained despite tax headwinds as front-loaded EV inventories and open market value (OMV) revision deferral are expected to cushion the first half of 2026 (1H 2026) total industry volume (TIV), said CIMB Securities Sdn Bhd. 

The research firm said in a note Thursday that this would keep EV prices stable post-completely built-up (CBU) tax expiry while aiding non-national demand.

It said the Malaysian automotive industry is recalibrating in 2026 following the expiry of the 100 per cent import and excise duty exemption for CBU EVs, which had been in place since 2022.

However, prices for popular EV models such as the BYD Atto 3, BYD Sealion and Xpeng G6 remain unchanged. Tesla Malaysia recently confirmed prices for its Model 3 and Model Y will remain unchanged from 2025 levels.

“We believe this reflects front-loaded EV inventories that entered Malaysia before Dec 28, 2025, ahead of the tax holiday deadline.

“Our channel checks suggest major EV players, including BYD, Xpeng and Proton e.MAS, have secured sufficient inventory to meet demand over the next three to six months, ahead of a transition to domestic assembly,” said CIMB Securities.

That said, some players may still face price adjustments during this interim period owing to gaps in locally assembled model availability, it added.

The Finance Ministry has informed the Malaysian Automotive Association that revisions to the OMV calculation methodology will be deferred by another six months to July (from January 2026).

“We view this as near-term relief, particularly for automakers with higher exposure to locally assembled vehicles, such as Toyota, Honda, Mazda, BMW and Mercedes-Benz,” it said.

Meanwhile, national brand, Proton recorded 3.3 per cent year-on-year (y-o-y) sales volume growth to 157,976 units in 2025, its highest level since 2011, driven mainly by EV sales following the launch of the Proton e.MAS 7 in December 2024, alongside a 26 per cent y-o-y increase in exports to 6,000 units, the research company said.

It said EVs accounted for 5.6 per cent of total sales, or 8,890 units, with the e.MAS 7 contributing 8,018 units and emerging as Malaysia’s best-selling EV model. 

CIMB Securities expects Proton to sustain healthy sales momentum in 2026, underpinned by two new model launches, Proton Saga MC3 and Proton e.MAS 5, with bookings exceeding 30,000 units and 14,600 units respectively.

It said Proton are also expected to benefit from Budget 2026 initiatives, including a matching grant of up to RM2,000 to support the voluntary scrapping of unroadworthy vehicles aged 15 years and above.

The research house maintained a ‘neutral’ rating on the Malaysian automotive sector, given the subdued growth outlook amid intensifying market competition, and expected the sector to continue to offer attractive dividend yields of 7.0-7.2 per cent for calendar year 2026-2027.