The Malaysian government is set to implement a new road tax fee structure for zero-emission vehicles (ZEVs) beginning January 1, 2026. This new structure will offer a significant reduction of 85% compared to the previous ZEV road tax system.
New Affordable Road Tax Structure for EVs
Since January 1, 2022, all electric vehicles (EVs) registered in Malaysia have been exempt from road tax. This exemption will continue until December 31, 2025. However, concerns have been raised about the high road tax fees post-exemption period.
Transport Minister Anthony Loke assured that the new structure would make road tax affordable for EV users and encourage the adoption of electric vehicles in Malaysia. The new fee rate will be based on the electric motor power of the vehicle.
“The fee rate will increase in line with the increase in electric motor power. Generally, an increase in electric motor power will represent an increase in purchase price, size, segment, and weight of vehicles. A progressive increase according to each increase in electric motor power will avoid sudden increases in LKM fee rates from one group to the next,” Loke explained during a press conference.
Encouraging Transition to Carbon-Free Vehicles
To promote the shift to carbon-free vehicles, the fee rates for most ZEVs will be lower compared to the rates for internal combustion engine (ICE) vehicles within the same vehicle body type. The new LKM fee rates will apply to pure battery electric vehicles (PBEVs) and fuel cell electric vehicles (FCEVs). On average, these new rates are 85% lower than existing rates.
Loke stated that the fee rates would be reviewed at least every five years to ensure they are effective in promoting the transition to ZEVs and to assess their impact on government revenue. The level of EV usage in Malaysia has shown positive growth in 2023, following government policies granting various exemptions from duties, taxes, and related fees.
Despite the growth, overall EV adoption in Malaysia is still in its early stages. In 2023, a total of 15,671 EVs were registered, making up 1% of the total number of registered vehicles (1,533,332). As of April 30, 2024, the number of registered EVs was 7,003, or 1.4% of the total vehicles (499,945).
New Fee Structure Details
The new road tax structure will categorize ZEVs into power blocks, each with a range of 100,000 watts. For example:
- Block 1: 1 to 100,000 watts (RM20 to RM70)
- Block 2: 100,001 to 210,000 watts
- Block 3: 210,001 to 310,000 watts (RM305 to RM575)
Within each block, the LKM fee rate will increase progressively according to each 9,999-watt increase in motor power.
Loke emphasized that this announcement is a clear message to EV manufacturers to consider Malaysia as their manufacturing hub. The government is fully committed to encouraging the adoption of EVs and is taking active measures to support its growth. Additionally, there are currently no plans to revise the existing LKM structure for ICE vehicles.
Pokdepinion: This was certainly a much needed change. If there was ever a time we can see a surge of EVs in Malaysia all of a sudden, it will be 2026 and it’s because of this.