Proton, Malaysia’s national carmaker, launched its highly anticipated electric vehicle (EV), the e.Mas7, in December 2024. The vehicle is positioned in a higher price bracket, ranging from RM105,800 to RM119,800. This contrasts sharply with Malaysia’s top-selling internal combustion engine (ICE) car of the previous year, the Perodua Bezza.
The e.Mas7 will initially be imported as a Completely-Built-Up (CBU) unit from Geely’s factories in China. This approach is due to the fact that Proton’s new EV manufacturing plant in Tanjung Malim, Malaysia, is scheduled to be operational only by the end of 2025. Simultaneously, Proton is working to establish new supply chains in preparation for the launch of the new EV. Electric vehicles have a different and simpler mechanical design. However, they require new batteries, advanced semiconductors, and sophisticated electronic components. These are needed to support the expected increase in the functionality of an EV.
To expedite the development of these new EV component supply chains, Proton organized a business match-making event in July 2024. This event took place at Geely’s Research Centre in Hangzhou Bay, China. The workshop enabled Proton’s current Malaysia-based suppliers to interact with Geely’s EV suppliers. This will allow local component producers to acquire necessary capital or technological partners to supply EV and New Energy Vehicle (NEV) components.
The market for EV components exemplifies derived demand, meaning that the expansion of these new supply chains hinges on the growth of EV sales. Demand for local EVs is likely to increase as the country expands its charging infrastructure, and prices eventually come down. This price reduction is particularly expected from 2026 onwards, at which time Malaysia will begin receiving imports of Completely-Knocked-Down (CKD) kits. However, it’s unlikely that EVs will reach the affordable price point of Perodua’s top-selling ICE model. The e.Mas7 supply chains will also need to rely on exports, given the automotive market’s size in Malaysia. The absence of economies of scale could hinder the capacity of Malaysian suppliers to compete. The automaker has plans to export the e.Mas7 to Mauritius, Nepal, Singapore, Trinidad and Tobago, and Brunei.
In Malaysia, the existing supply chain for ICE models can continue to function alongside the growth of EVs. This is likely to continue as long as demand for ICE cars persists. The transition to EVs will have far-reaching consequences. Some existing component suppliers may struggle to adapt. ICE vehicles require systems that EVs do not. As EV demand rises, suppliers of exhaust systems, fuel systems, and transmissions may face the need to restructure their operations.
Proton’s partnership with Geely, which began in 2017, has led to the introduction of new models, what is known as the X-series. These include the X70, X50, and X90, while also keeping its legacy series, which includes the Persona, Iriz, Exora, and Saga. These new models generally do not compete directly with the older ones, as they are positioned in a superior engine class. The X-series models are priced from around RM80,000 to just over RM100,000. Proton’s most popular current model, the Proton Saga, sells for under RM50,000.
Demand for these less expensive, legacy models will continue, even with the government’s push towards EVs. Affordable EVs priced under RM50,000 are not yet available. Perodua’s potential EV is expected to cost RM80,000 without a battery, in which case users will lease the batteries. The planned removal of fuel subsidies may not immediately shift consumers to EVs. The subsidy will be maintained for lower-income households. If these households are allowed to use fossil fuels, the demand for the legacy models, and some Perodua models at a similar price point, will persist. Moreover, a survey indicated that 40% of the consumers still prefer ICE vehicles, while 20% prefer hybrid cars. Malaysian consumers are still, primarily, cautious about the adoption of EVs.
Since 2020, Proton has also been actively exporting its ICE models, including the X-series, to countries such as Kenya, Mauritius, South Africa, Pakistan, Brunei, Bangladesh, and Egypt. Local assembly operations have begun in some export destinations, including Kenya (2020), Pakistan (2021), and Egypt (2024). In order to support planned exports, including CKD kits for Proton’s assembly plants in countries like Bangladesh, the company invested in a new hi-tech engine assembly line in 2023. The facility is the first to assemble Geely’s 1.5 TGDI (Turbo Gasoline Direct Injection) engine outside of China, boasting an annual production capacity of 180,000 units. This Malaysia-made TGDI engine powers Proton’s X70 and X90 models for overseas markets.
Proton’s RM1.8 billion investment to upgrade its Tanjung Malim plant and expand local engine manufacturing highlights the company’s belief that global demand for ICE cars will endure. Proton’s first EV will kickstart new supply chains with Geely and local businesses. The shift to EVs will depend on prices, charging infrastructure, and the continued presence of Proton’s existing supply chain. This is an area in which the company has already made considerable investments. The transition will be gradual, reflecting both market forces and the reality of ongoing investments in existing technologies.
