You need to have already heard in regards to the new highway tax construction for electrical autos (EVs), introduced this week by the transport ministry. Set to be in place from January 1, 2026, the EV highway tax construction replaces the earlier template from 2019 and is supposed to encourage EV adoption with charges which might be comparatively decrease than inside combustion engine (ICE) autos.
Not like ICE autos which might be taxed primarily based on engine capability, EVs don’t have engines, so what’s being measured with battery-powered vehicles are energy, sometimes measured in kilowatts (kW) for EVs, versus PS/hp, which is extra widespread with ICE vehicles in Malaysia. One horsepower is equal to 0.746 kW, 100 hp = 74.6 kW.
The EVs are then grouped into completely different motor(s) output energy bands, similar to how it’s with ‘cc’ for engines. We’ve already executed a complete explainer on the brand new EV highway tax construction, and you’ll view it right here together with a highway tax checklist for all EVs at the moment bought in Malaysia.
However what about ICE autos, which nearly all of Malaysians personal, and can proceed to personal within the foreseeable future? Will there be a change in highway tax calculation primarily based on energy as a substitute of engine capability? Sadly no, the federal government has confirmed. So, shifting ahead, EV highway tax will likely be primarily based on kW and ICE will proceed with cubic capability.
Which is antiquated. Even earlier than EVs grew to become mainstream right here, holes have been punched by the cc-based ICE highway tax format, first by downsized turbocharged engines after which plug-in hybrids. Each these powertrain developments ‘cheated the system’ with smaller capability engines, supplemented by turbocharging or electrical motors within the case of PHEVs to make up the facility deficit.
Disparate examples embody a RM90+ok Nissan Almera paying the identical RM20 highway tax as a RM22k Perodua Axia E (each 1.0L), a Toyota Vios paying the identical as a Honda HR-V Turbo (each 1.5L) and a Mercedes-Benz A200 (1.3L) paying much less highway tax than a Proton Persona (1.6L). A Toyota Camry proprietor forks out much less for highway tax than his pal with a BMW 530i too (RM867 vs RM379). An instance of a small engine with very excessive output is the Mercedes-AMG A45S, which 2.0L engine places out 421 PS.
An influence-based highway tax construction would additionally cowl hybrids and PHEVs higher, as at the moment, the electrified energy in these vehicles aren’t taxed. That’s precisely how we had a RM1.2 million BMW i8 with sci-fi seems and scissor doorways responsible for simply RM90 a yr in highway tax (1.5L engine), whereas a Mercedes-AMG GT (4.0L V8) proprietor coughed out RM6.5k every year.
After which there’s the subject of outdated vehicles. Bear in mind the times when the quantity on a automobile’s boot lid corresponded with its engine dimension? These vehicles – principally European – are actually inexpensive (to buy) and lots of nonetheless have loads of life in them with some TLC, however excessive highway tax in relation to the automobile’s present worth holds many again. Many such outdated vehicles with massive engines (however comparatively low energy in at present’s context) are deserted as a result of it prices a lot to maintain them highway authorized.
Check out the checklist we compiled, which compares an ICE automobile’s theoretical kW-based highway tax (similar to for EVs) versus their precise highway tax. Save for a couple of outliers – principally PHEVs or vehicles with downsized turbo engines – many vehicles would have decrease highway tax, some considerably so. The largest distinction got here from the pick-up vans (Hilux and Triton, over 80% much less) and supercars/luxurious vehicles from Ferrari and Rolls-Royce (Ghost -92.4%). Is your automobile within the checklist? Try how a lot you’d need to pay if highway tax is predicated on energy.
We perceive that highway tax is a large income generator for the federal government, which collected practically RM3 billion from automobile house owners final yr from this avenue alone, so it’s positively not of their curiosity to scale back highway tax, particularly for high-end vehicles. As for individuals who are saying that highway tax for EVs remains to be too costly, we hope that this little train have given you some context.
As a substitute, the kW-based highway tax system is beneficial to EV adopters, which is in step with the federal government’s inexperienced agenda. Take this method and apply it on ICE vehicles – which the authorities have stated there aren’t any plans to – and we will see that highway tax for an enormous portion of vehicles on the highway will come down. If anybody ought to complain…
It’s ICE drivers, who’re paying the next tax in comparison with a similarly-powered EV, and we’re not even speaking about torque and acceleration, the precise issues that make an EV really feel far more ‘highly effective’ than what their kW determine suggests. It might be truthful if highway tax for ICE and EVs are measured on the identical stick, however we’re not hopeful that this may occur, for the above-mentioned causes. The present charges “are already low and cheap,” Anthony Loke stated.
Strategies? ICE vehicles might undertake a kW-based highway tax construction, however with increased charges than the present EV template. This might future-proof the construction towards downsizing and electrification engine developments, whereas charging highly effective engines extra (rightly so). Ditching cc for energy might even see highway tax income drop, however this might then be balanced by high-powered vehicles (the principle beneficiaries of kW-based highway tax) consuming extra petrol, which blanket subsidy will likely be eliminated anytime now. What do you suppose?
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