No extension for EV road tax exemption in Malaysia– How much is the cost?

KUALA LUMPUR: Bad news for EV owners—Malaysia’s road tax exemption for electric vehicles (EVs) is coming to an end. The government has confirmed that the exemption, which has been in place since 1 January 2022, will not be extended beyond 31 December 2025.

The official confirmation came from Minister of Trade, Tengku Zafrul Aziz, in a parliamentary reply on 25 February 2025. While this isn’t exactly a surprise, it does mean EV owners will have to start factoring road tax into their running costs from 2026 onwards.

The EV road tax exemption was first announced in Budget 2022 (October 2021) as part of the government’s push to encourage EV adoption. With no road tax to pay, it was a great incentive for many Malaysians to make the switch to electric. But now, the grace period is coming to an end.

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Industry Calls for an Extension

Not everyone is happy about the exemption ending. The Malaysian Automotive Association (MAA) had previously urged the government in October 2024 to extend the exemption and include hybrid vehicles in the tax break.

However, it looks like those requests weren’t enough to sway the government’s decision.

In Malaysia, EV road tax is based on the vehicle's maximum motor power output (kW) rather than engine capacity (cc) like traditional internal combustion engine (ICE) cars.

The new EV road tax structure—announced in June 2023 and effective from 1 January 2026—significantly lowers rates compared to the outdated 2009 calculation.

How Is EV Road Tax Calculated?

The Ministry of Transport (MoT) introduced a tiered structure where the tax rate increases as the motor power (kW) rises. Here’s the general idea behind it:

1. EVs with lower power output (small city cars, entry-level EVs) pay less.
2. Luxury and high-performance EVs (high kW) have higher tax rates.
3. Road tax is calculated per individual motor power rating, not cumulative (for dual-motor setups, the highest-output motor is taxed).

The government introduced a discounted formula to reduce the burden on EV owners compared to the previous 2009 system. The general progression of road tax rates with increasing power output, calculation is more detailed, but here's our attempt to simplify it.

Power Output (kW)	Estimated Road Tax (2026)
50 kW and below	RM20 – RM40
51 – 100 kW	RM40 – RM100
101 – 150 kW	RM100 – RM200
151 – 200 kW	RM200 – RM500
201 – 300 kW	RM500 – RM1,500
301 kW and above	RM1,500+

 

As an example, here's what EV road tax could look like

Model	Motor Output	Old Road Tax (2009)	New Road Tax (2026)
BYD Dolphin Premium Extended	150 kW	RM903	RM160
Tesla Model Y Long Range	300 kW	RM4,503	RM545

What’s Next for EV Owners?

For those considering an EV purchase, this news means you have until the end of 2025 to enjoy tax-free ownership. If you’re curious about how much road tax you’ll be paying in the future, there are EV Road Tax Calculator available online to help you plan ahead.

While it’s disappointing that the exemption won’t continue, at least the revised road tax rates aren’t as punishing as before. 

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