Starting in 2026, the Malaysian government will introduce a new road tax structure for electric vehicles (EVs). This change will affect both current and prospective EV car owners, marking a significant shift in the nation’s automotive landscape. With growing interest in sustainable transportation, understanding how this new system will influence your road tax payments is essential for planning your vehicle’s running costs. Let’s take a closer look at what this shift means for EV car and other vehicle owners in Malaysia.

New vs. Old Road Tax Structure in Malaysia

Here’s a breakdown of how the upcoming EV road tax system compares with the existing one:

1. Old Road Tax System

Under the previous system, which was implemented in 2019, EV owners enjoyed a substantial benefit: a more affordable road tax based on battery kilowatt (kW) output rather than the engine’s cubic capacity (CC). This structure aimed to encourage the adoption of environmentally friendly vehicles, such as EVs, and to help reduce Malaysia’s carbon emissions in line with the country’s sustainability goals.

For example, an EV with a battery capacity of 100 kW would have an annual road tax of RM274, a considerable saving compared to internal combustion engine (ICE) vehicles. In contrast, a traditional ICE vehicle with similar power could face an annual road tax of RM1,000, a significant difference that incentivised early adopters to make the switch to electric.

2. New Road Tax System

The new system, which comes into effect in 2026, will retain the principle of charging road tax based on battery capacity but with reduced overall rates. This continued effort is aimed at incentivising more people to transition to EVs while providing a more structured and predictable cost model for EV owners.

For instance, under the new system, the owner of a 100 kW EV would only pay a road tax of RM70 per year. In comparison, an ICE vehicle with a 2.0-litre engine could incur a tax of RM1,000, while larger engines, such as 3.0-litre models, could see taxes upwards of RM2,000 annually. Although EVs will no longer enjoy full tax exemption, their road tax will still be significantly lower than that of traditional vehicles, maintaining their appeal as a cost-effective alternative.

How Will the New Road Tax Structure Affect EV Car Owners?

The new road tax structure for EVs brings several notable changes that current and future EV car owners should be aware of:

1. End of Tax Exemption

One of the most immediate effects of the new system is the removal of the full road tax exemption for EVs. Current owners who have benefited from zero road tax will now need to account for this new cost in their annual budget. However, this change is intended to balance the government’s need for revenue generation while continuing to promote the adoption of eco-friendly vehicles.

It’s worth noting that while the tax exemption is ending, the new rates are designed to remain competitive compared to ICE vehicles, making EVs a financially attractive option even with the new road tax structure in place.

2. Lower Overall Tax

Despite the removal of the exemption, the new road tax system will still allow EV owners to pay much lower rates than ICE vehicle owners. For example, while a traditional ICE vehicle might incur a road tax of RM1,000 annually, an equivalent EV could see taxes as low as RM300. This significant difference ensures that electric vehicles remain an economically viable and attractive choice for Malaysians, especially as fuel prices and maintenance costs for ICE vehicles continue to rise.

3. Increased EV Adoption

The introduction of a more structured road tax for EVs is part of the government’s broader strategy to make electric vehicles a mainstream option. By creating a fairer and more balanced tax system, EV ownership costs are being normalised, bringing them closer to the costs of owning a conventional vehicle. This strategic move is expected to drive greater adoption of EVs in Malaysia, as more consumers view them as a long-term investment that offers both environmental and financial benefits.

4. Enhanced Infrastructure for EV Owners

With the additional revenue generated from the new road tax structure, the government plans to reinvest in the development of EV infrastructure. This could include expanding the network of fast-charging stations along major highways, offering incentives to businesses for installing charging points, and developing dedicated EV service centres with trained technicians. Improved infrastructure will make owning an EV more convenient, addressing common concerns such as range anxiety and the availability of charging options, thereby further encouraging EV ownership in Malaysia.

Conclusion

The new road tax structure for EVs in Malaysia represents a balanced approach, ensuring that EVs remain a cost-effective alternative to traditional vehicles while supporting the country’s sustainability goals. Although the tax exemption will end, the new rates remain affordable, making EVs an attractive option for drivers looking to reduce both environmental impact and long-term costs.

Staying informed about these tax changes will help you plan your finances more effectively as an EV owner. By understanding how this new structure works, you can make more informed decisions about your vehicle’s future expenses and potential savings. As Malaysia moves towards a greener future, EV ownership is likely to become even more appealing with the support of improved infrastructure and government initiatives.