In Cars, Local News / By Jonathan Lee / 17 August 2018 12:23 pm / 42 comments

The debate over the third national car project may rage on, but an industry heavyweight has weighed in on the situation, calling for Malaysia to act early and squabble less to take advantage of the electric vehicle boom, according to a report by Bernama.

Former Proton chairman and managing director Tan Sri Mohd Nadzmi Mohd Salleh said that the country is not too far behind in developing EV technology, as there is no real leader in the field. “Other companies have their EVs and hybrid cars but nobody, except from Tesla, can say that they have a clear advantage over the others,” he said. “So, the competitive advantage of all companies for electric vehicles is almost the same.”

One of the major problems larger carmakers faced in producing EVs on a large scale, Nadzmi noted, was resistance not only from vendors and parts suppliers, but also internally due to heavy investments already made towards petrol and diesel engines. “We are a car producing country but we are not heavily invested in the old conventional technology,” he said. “I think if we introduce new technology for the industry, people will support it and there won’t be much resistance.”

Nadzmi, who is now chairman of Nadicorp, admitted that there is bound to be some resistance from suppliers and after sales service providers, as there would be fewer components and maintenance needed for EVs. However, he added that these businesses could adapt to such changes gradually as EVs would not replace conventionally-powered cars overnight. “For the next 10 to 15 years, there will be more electric vehicles on the road and this will be the megatrend in the industry which is already happening,” he said.

Although Malaysia does not have the capability to produce EVs at the moment, Nadzmi said that it would not be impossible for the country to develop this industry, pointing to the plantation sector as an example of Malaysia’s adaptability.

“Just look at our plantation industry planting rubber and palm oil trees which are not native to Malaysia where we managed to become among the largest exporter of these commodities,” he said. “To me, if you want to go into a particular industry, you must have the passion for it and you must be prepared for it,” he said.

Nadzmi urged entrepreneurs, private companies and public-listed companies to take the lead in developing the EV industry and not the government, which he said should instead perform a supporting role. “You need entrepreneurs to come and do it while the government can take some equity or give grants to develop this industry before it can stand on its own,” he said.

Hiring the right talent and implementing a sound business model is also important for the success of the venture, said Nadzmi, and that includes bringing in foreign expertise at the initial stage before developing local human capital.

The Proton plant in Tanjung Malim

“If Malaysia wants to grow fast in this industry, or any other industry, we must not wait for our people to have the knowledge to develop the new technology,” he said. “In many countries where they don’t have the technology and expertise, they will buy it or hire international people to work for them. Over time, they will have more of their own people to work on the project.”

Nazdmi also opined that those interested in building EVs could start with commercial vehicles such as buses and lorries, which do not need large volumes to be sustainable. “The technology is readily available and [it’s] only a matter of system integration,” he said. “Let us look at EVs in a different light, like catering for the first- and last-mile solutions in public transport where there is not much competition, and over a period of time, we can also produce passenger cars.”

He added that commercial EVs are less complicated to develop compared to passenger cars, due to the larger space available within the vehicle to place batteries, as well as less complicated chassis and technologies. Commercial vehicle buyers are also typically profit-minded businesses and logistics operators and not customers at large, which Nadzmi said would make EVs an easier sell. “If it is cheaper for them to own, maintain and operate commercial EVs, I think they will opt for these vehicles,” he said.

This Proton Iriz EV was at one point slated for production

Nadzmi said that the third national car project should emulate Perodua’s success story by partnering with a large foreign company to reduce development costs. “Perodua’s business model is the best. Because Malaysia is a small market, there is a sharing of development cost between the Toyota group of companies, mainly Toyota and Daihatsu, and only a marginal cost incurred on Perodua,” he said. “This is the only way to do it. Without [the right business model], I don’t think any car company in a small market can be viable.”

The former Proton executive recalled his experience during his time at the national carmaker when Perodua was given better market protection compared to Proton to help it become sustainable. This same support, he said, could be afforded to the new national carmaker as well. “Proton from the very beginning paid import tax and excise duty while Perodua didn’t. They had that advantage over several years,” he added.

The new national car topic was first raised by prime minister Tun Dr Mahathir Mohamad at the Nikkei Conference in Tokyo in June, after the premier felt that his beloved Proton was no longer a national carmaker. Despite the idea not being very well received by Malaysians, including politicians, Mahathir has pressed on, reasoning that the project would help engineering companies who have suffered following Geely’s acquisition of Proton and boost Malaysia’s engineering capabilities.