Thailand, Malaysia’s Tesla hopes fade as Elon Musk appears to go cold on Asean
- The reported scrapping of a Southeast Asian Tesla factory could boost tariff-squeezed Chinese EV brands seeking new markets
But as rumblings circulated that the American carmaker had scrapped its plan for a factory in Malaysia – as well as Thailand and Indonesia – Malaysian Trade Minister Tengku Zafrul Aziz said on Thursday that efforts to woo Tesla had not been “a waste of time”.
“Indeed, we held discussions with Elon Musk in an effort to attract investment, but Tesla never made a commitment to open a factory here,” Tengku Zafrul wrote on X.
Anwar said intense competition from Chinese rivals influenced Tesla’s decision.
“[Trade Minister] Tengku Zafrul received the latest information saying that it is because [Tesla] is experiencing losses due to stiff competition from Chinese EVs,” the prime minister told reporters on Friday after the company briefed his administration.
According to consultants EY, the Southeast Asian car market could be worth up to US$100 billion by 2035.
Eager to have the poster child of EVs in the country, Malaysia waived a long-standing affirmative action policy and allowed Tesla to enter the local market without having a local partner, with Anwar saying the company’s interest in setting shop in the country is “as good as putting [in the] equity” in an interview with CNBC last year.
Rumours that Tesla has gone cold on the Asean region followed a report in Thai paper The Nation quoting an anonymous official source as saying that the firm has scrapped plans for new factories in Thailand, Malaysia, or Indonesia and pulled out the team overseeing the project.
Tesla did not answer repeated requests for comment and is yet to confirm a pullback of its ambitions.
But EV market analysts said any retreat from plans for a battery-powered vehicle hub would be driven by the numbers.
“Tesla would be a latecomer in this market, and its EVs are pricier than those of Chinese companies,” said Cassey Lee from ISEAS – Yusof Ishak Institute.
While the region has the potential for a vibrant EV market, it is currently dominated by multiple Chinese companies like BYD that have a strong grip on the sector and offer cars at a cheaper price point than Tesla, he added.
China EV companies are desperately seeking new markets after the US and EU lumped high tariffs on imported vehicles in a protectionist surge around the new car market.
Oil-dependent Malaysia has been looking to wean off petroleum and invest in other sources of growth, including EV manufacturing, renewable energy and carbon capture.
According to the minister, Malaysia has attracted over 24.55 billion ringgit (US$5.5 billion) of investment in EV-related manufacturing activities from other companies such as Chery, Gemilang Coachwork, Samsung SDI Energy, NexV Manufacturing and EVE Energy.
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Local manufacturers in Malaysia also support Tesla’s global supply chain by providing it with parts, components and factory automation systems.
Shahrol Azral Ibrahim Halmi, president of the Malaysian Electric Vehicle Owners Club (Myevoc), was cautiously optimistic about the news of the alleged scrapping of a Southeast Asian Tesla factory.
“This is good news for current owners and those planning to buy within the tax holiday period, as then the resale values would hold better,” Shahrol told This Week in Asia.
This is because the price of Tesla vehicles and EVs, in general, is artificially low in Malaysia due to a string of tax incentives that will expire by the end of 2025.
“[However], the worry though is about Tesla’s after-sales support and charging network expansion, if their sales volume were to shrink 2026 onwards.”
Tesla cars being sold in Malaysia are imported from its factory in Shanghai.
After a brief lead in 2023, Tesla now plays second fiddle to Shenzhen’s BYD, which has been leading the EV market in Malaysia, selling over 8,000 cars since last year – 3,000 more than Tesla.
EV sales in Southeast Asia are expected to hit between US$80 billion and US$100 billion by 2035, from about US$2 billion in 2021, according to a January report by EY-Parthenon, the strategy consulting arm of Ernst & Young.
However, unlike other markets, most Southeast Asian drivers have lower budgets and appealing to them will inevitably trigger a price war among carmakers.
In Malaysia, several EV models are being sold at 100,000 ringgit (US$22,400), the floor price set by the government to protect its local carmakers, Proton and Perodua. Meanwhile, the cheapest Tesla, the Model 3, starts at 181,000 ringgit (US$40,560).
Last Saturday, Proton announced its entry into the EV segment with the soft launch of its E. Mas 7 model. However, the price of the Chinese co-developed vehicle has yet to be announced.
