Following Tesla Deal, Malaysia 'Open' to Other EV Investments

Tesla has been in ongoing discussions with a number of countries as it expands, but the automaker’s recent battery manufacturing deal with Malaysia comes with a major exemption. The establishment of a regional headquarters in the country is set to help bolster the electric vehicle battery industry in Southeast Asia, and officials say they’re open to more EV investments in the future.

Above: A Tesla Model S (Image: Casey Murphy / EVANNEX).

Malaysian Prime Minister Anwar Ibrahim gave an exclusive interview with CNBC at government offices south of Kuala Lumpur in Putrajaya earlier this month. During the interview, Anwar emphasized the country’s hopes to increase its role in the global EV battery supply chain, under its Battery Electric Vehicle Global Leaders initiative.

“EV happens to be our priority,” Anwar said in the interview. He also added that foreign investments like the one from Tesla would “can benefit three or four local industries.”

Tesla has established its Southeast Asian headquarters and a service center in Selangor, which has diagnostic service tools and trained technicians to help owners with their cars. The company also plans to deploy its Supercharger stations in metro areas within Malaysia, the first of which is expected to be built in downtown Kuala Lumpur.

Operation of the company’s business in the country bypasses policies giving money to native populations including majority Malay-Muslim communities and non-Malay indigenous groups, as CNBC points out.

The deal in Malaysia lets Tesla sell its Shanghai-built vehicles in the country without paying extra import tariffs, or any markups from middlemen. Additionally, Tesla is exempt from the requirement mandating that foreign companies must meet a minimum of 30 percent equity ownership by Bumiputeras upon conducting business in the country.

“To me, [the Tesla deal] is as good as putting a 30% equity,” Anwar added on the exemption. “In fact, in terms of real advantage returns to the economy — that is better.”

Malaysia has granted similar incentives to tech companies and automakers in the past. Notably, this has included Chinese automaker Zhejiang Geely with a $10 million expansion in Tanjong Malim, and the German chip manufacturer Infineon Technologies for a 5 billion euro ($5.46 billion) expansion of a water fabrication site in Kulim.

“This is not new. There has been exceptions ... given for digital transformation, for IT-related activities or investments,” the prime minister said. “We have done that in the past — very selective. So the issue’s not just Elon Musk, which I think is much required in this country to give this confidence and the participation of our players.”

Anwar also said that other EV companies have “not been asking” to set up battery production operations in the country, though he notes that “the possibility will be open.” The news also comes as ongoing negotiations between Tesla and nearby country Indonesia have yet to amount to any tangible manufacturing deals, though Anwar expects the automaker's move to benefit both countries.

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