Malaysia’s full EV tax exemption ended on 31 December 2025 — from 1 January 2026, fully imported (CBU) EVs face new import duties (typically 30% import duty + 10% excise duty + 10% sales tax, or 5%+10%+10% for FTA-eligible countries like China), while locally assembled (CKD) EVs retain their exemption until 31 December 2027, and road tax has moved from a full waiver to a new power-based (kW) structure. The bottom line for most buyers: CKD EVs like the Proton eMas 7 remain highly cost-effective, while imported CBU models — including most Tesla and some BYD trims — now cost meaningfully more than they did in 2025.
This guide breaks down exactly what changed, what tax relief is still available, which specific incentives ended, and how to interpret these changes for your own purchase decision.
What Actually Ended on 31 December 2025
Two separate incentives expired at the same time, and it’s worth understanding them as distinct changes rather than one single policy shift.
- CBU import duty and excise duty exemption — fully imported EVs no longer receive automatic duty waivers
- Full road tax exemption — EVs moved from paying zero road tax to a new kilowatt-based fee schedule
Both changes took effect from 1 January 2026, though a transition rule applied: CBU EVs that physically arrived in Malaysia before 28 December 2025 retained the old full exemption, with eligibility determined by port-of-entry date rather than customer delivery date.
What’s Still Exempt: CKD EVs Until 2027
Locally assembled (CKD) EVs continue enjoying full duty exemptions until 31 December 2027 — a full two years longer than CBU models. This is a deliberate policy choice, not an oversight: the government is explicitly incentivizing domestic manufacturing rather than penalizing imports outright. Models like the Proton eMas 7, along with CKD lines being developed by MG Motor, Zeekr, BYD, Leapmotor, and Xpeng, benefit from this extended window.
The 10% sales tax (SST) exemption specifically runs on a staggered timeline: 0% sales tax on CBU EVs until 31 December 2026, and on CKD EVs until 31 December 2027 — meaning even CBU models retain this one specific tax break for another year, even though their import and excise duty exemptions have already ended.
New Import Duty Structure for CBU EVs
Starting 1 January 2026, CBU EVs face duties structured as either 30% import duty + 10% excise duty + 10% sales tax, or a reduced 5% import duty + 10% excise duty + 10% sales tax for vehicles from countries covered by a Malaysian Free Trade Agreement. China-built EVs benefit specifically from the ACFTA (ASEAN-China Free Trade Agreement) framework, meaning most BYD, Chery, GWM, Smart, and Zeekr CBU models fall into the lower 5% import-duty bracket — a structural advantage that Korean and some European CBU imports don’t share. This is expected to result in price increases of at least 30% for fully imported EVs without FTA coverage.
The New Road Tax Structure: How Much Do You Actually Pay?
Road tax for EVs is now calculated by motor power output in kilowatts (kW) rather than the old cc-based schedule used for petrol cars — and despite ending the free ride, it remains roughly 85% cheaper than equivalent combustion-engine road tax.
| EV Category | Approximate Power | Annual Road Tax (2026) |
|---|---|---|
| Entry-level/compact EV | Under 50 kW | ~RM20-40 |
| Mainstream mass-market EV | ~80-150 kW | RM40-280 |
| High-performance/luxury EV (e.g., Tesla Model Y) | 200 kW+ | Meaningfully higher, scales with power |
For most Malaysians buying a mainstream EV, this new road tax remains genuinely affordable — most mass-market electric cars pay between RM40 and RM280 annually, a fraction of what an equivalent petrol car in the same power class would cost.
What Other Incentives Are Still Available?
Beyond the CKD duty exemption, several other EV-related tax reliefs remain active in 2026:
- Home EV charger installation tax relief — up to RM2,500 per year for costs related to installing home charging equipment
- CKD sales tax exemption — 0% SST on CKD EVs through 31 December 2027
- Residual CBU sales tax exemption — 0% SST on CBU EVs through 31 December 2026 specifically, even though import and excise duty exemptions have already lapsed
- Significantly lower running costs — electricity remains far cheaper per kilometre than petrol, an ongoing (non-tax) financial incentive that persists regardless of these policy changes
Timeline Summary: Malaysia EV Tax Exemption 2026
To recap the full picture in one place:
| Incentive | Status | End Date |
|---|---|---|
| CBU import duty exemption | ENDED | 31 December 2025 |
| CBU excise duty exemption | ENDED | 31 December 2025 |
| CBU sales tax (SST) exemption | Still active | 31 December 2026 |
| CKD import/excise/sales tax exemption | Still active | 31 December 2027 |
| Full road tax exemption | ENDED | 31 December 2025 (replaced by kW-based structure) |
| Home EV charger installation tax relief | Still active | Up to RM2,500/year |
This timeline is the clearest way to see that the Malaysia EV tax exemption landscape hasn’t disappeared — it’s been restructured to favor a specific outcome (local assembly) rather than eliminated across the board.
CKD vs CBU: Why This Distinction Now Matters More Than Ever
The gap between locally assembled and fully imported EVs has widened considerably, making assembly origin one of the most important factors in a 2026 EV purchase decision. A CKD EV benefits from duty exemptions running two years longer than a comparable CBU model, translating into a meaningful price advantage that didn’t exist as starkly before 2026. This is precisely why several international EV brands have accelerated plans to establish local CKD assembly in Malaysia — the policy is deliberately steering both manufacturers and buyers toward domestic production. If you’re comparing specific CKD options, our Proton eMas 7 review covers Malaysia’s flagship CKD EV in detail.
How This Affects Specific Popular Models
Tesla, most BYD CBU trims, Porsche, and Volvo models sold as fully imported units are now subject to the new duty structure, while Proton’s CKD lineup and other locally assembled models retain their exemption advantage. Buyers specifically comparing a CBU BYD model against Proton’s CKD eMas 7 should factor in this structural pricing difference, not just the sticker price alone, since the underlying tax treatment now diverges significantly between the two. Our BYD Atto 3 review — a CBU model — covers current 2026 pricing that already reflects the new duty structure.
Common Misconceptions About the 2026 Changes
“EVs are no longer tax-advantaged in Malaysia at all” — this significantly overstates the change. CKD EVs retain full exemptions until 2027, road tax remains roughly 85% cheaper than petrol equivalents, and running costs remain far lower regardless of these specific tax adjustments.
“The changes apply retroactively to EVs I already own” — they don’t. The new road tax structure applies from your next renewal date after 1 January 2026, and the duty changes only affected CBU units that hadn’t yet entered Malaysian customs before the 28 December 2025 cutoff.
“All imported EVs got dramatically more expensive” — the actual increase depends heavily on country of origin. China-built EVs benefiting from ACFTA fall into the lower 5% import-duty bracket, meaning the price impact is considerably smaller than for Korean or European imports facing the full 30% rate.
What This Means for Green Financing and Other Bank Incentives
Beyond direct tax policy, several Malaysian banks continue offering green financing programmes for EV purchases, with interest rate differences that, while individually small, can add up meaningfully given the larger loan principals typical of EV purchases. These bank-level incentives operate independently of the government’s Malaysia EV tax exemption framework covered above, meaning they remain available regardless of whether you’re buying a CKD or CBU model. It’s worth checking current green financing rates across a few banks before finalizing your purchase financing, since this is a separate lever from the tax changes that can still meaningfully affect your total cost.
Final Thoughts
Malaysia’s 2026 EV tax changes represent a genuine but measured shift, not the end of EV incentives entirely — the clear message from policy is a decisive push toward locally assembled vehicles, with CKD models retaining full exemptions until 2027 while CBU imports now face real duty costs, moderated somewhat for FTA-eligible countries like China. For most everyday buyers, the practical takeaway is straightforward: CKD EVs like the Proton eMas 7 remain highly cost-effective, road tax remains dramatically cheaper than petrol equivalents even under the new kW-based structure, and running cost savings from cheaper electricity persist unchanged. The clearest financial impact falls specifically on buyers of premium CBU imports without FTA coverage, where price increases of 30% or more are a genuine new consideration.
Frequently Asked Questions
Do EVs still get tax exemptions in Malaysia in 2026?
Yes, but selectively — CKD (locally assembled) EVs retain full duty exemptions until 31 December 2027, while CBU (fully imported) EVs lost their import and excise duty exemption from 1 January 2026, though a residual sales tax exemption continues for CBU EVs until the end of 2026.
How much is EV road tax in Malaysia now?
Most mainstream EVs pay between RM40 and RM280 annually under the new kW-based structure, still roughly 85% cheaper than equivalent petrol car road tax.
Which EVs are most affected by the 2026 duty changes?
Fully imported (CBU) models without Free Trade Agreement coverage face the steepest increases — Tesla, some BYD trims, Porsche, and Volvo among them — while China-built EVs benefit from a reduced 5% import duty rate under ACFTA.
Is it still worth buying an EV in Malaysia after these changes?
Generally yes, especially for CKD models, since road tax remains far cheaper than petrol equivalents, running costs stay low, and CKD EVs retain full tax exemptions until 2027.
Does the new road tax apply to EVs I already own?
Yes — the new kW-based road tax structure applies from your vehicle’s next renewal date on or after 1 January 2026, regardless of when you originally purchased the vehicle.