Chinese EV carmakers bring their own parts, and Malaysian suppliers are watching from the kerb

An EV supply chain is the network that supplies an electric vehicle’s parts, technology, assembly and after-sales support. It includes component makers, technology providers, assemblers and service businesses. It matters because EVs use a different supply chain from Japanese petrol-car production, according to an Indonesian analyst quoted by SCMP.

When Chinese carmakers bring their own parts and supplier networks, they rely more on components made elsewhere and companies already connected to their production systems. Malaysia’s local firms then face fewer chances to supply newly assembled EVs. The article reports that domestically assembled EVs have only 20 to 30 per cent local content.

This does not mean local companies have no future. Malaysia has brought suppliers together with Chery, producing four agreements covering components, technology transfer and joint investment. Servicing, hybrid systems and used-EV assessments may also create openings. However, firms need clear plans and enough time to prepare before investing.

EVs assembled in Malaysia currently use only 20 to 30 per cent local content, according to local news reports cited in the article. Local content means the share of a vehicle’s value supplied or produced domestically. The figure shows how limited Malaysian participation remains in EV production.

The comparison is striking. Foreign-branded cars with conventional engines can reach up to 70 per cent local content. These vehicles have benefited from a more established network of Malaysian parts makers, while EV production is still connected strongly to imported components and overseas supplier networks.

The gap matters because a vehicle assembly plant does not automatically create broad opportunities for local companies. Malaysia is trying to close it through supplier meetings and agreements with Chery. Four commercial agreements covered components, technology transfer and joint investment. More local engineering experience, especially through hybrids, could gradually raise domestic EV participation.

Chinese EV makers tend to use imported components and their own established supplier networks because their production system is organised differently from the Japanese auto supply chain. The article does not give one definitive reason, such as a specific tariff or technical rule. It describes a strong preference for Chinese-linked suppliers and components.

Malaysia’s experience illustrates the result. Domestically assembled EVs reportedly contain only 20 to 30 per cent local content, compared with up to 70 per cent for foreign-branded conventional cars. Chinese carmakers can therefore assemble vehicles locally without sourcing most parts from Malaysian companies. Model-specific components and specialised technology also make entry more difficult.

The pattern creates a large challenge for local suppliers. Malaysia is trying to build connections through MIDA’s meetings with Chery, which produced four commercial agreements. Those agreements involve components, technology transfer and joint investment, potentially giving Malaysian firms a route into the network.

Malaysian, Thai and Indonesian suppliers that mainly make petrol- and diesel-car parts risk losing demand as vehicle production shifts toward EVs. Their existing products are tied to conventional engines and related systems. As those vehicles become a smaller part of new production, suppliers may struggle to replace the business quickly.

The pressure is already regional. The article says suppliers in Indonesia and Thailand are also facing weaker demand for petrol and diesel parts. Thai suppliers are disadvantaged by costs and proprietary technology, while Indonesia is urged to use local-content rules so EV investments absorb small local manufacturers. These barriers make the transition more than a simple change in product labels.

Some firms could adapt through hybrids, EV servicing or used-EV assessment. Domestic electrification programmes are gradually building engineering expertise, and hybrid high-voltage experience may help vendors develop EV components. Still, smaller companies need funding, clearer plans and stable policies before they can scale up.

Local firms may enter the EV economy through several routes besides making complete EV components. Hybrids combine a petrol engine with an electric motor, so suppliers can gain experience with high-voltage systems while domestic carmakers build electrification programmes. Servicing conventional repairs and assessing used EVs offer further opportunities.

Malaysia already has a strong repair ecosystem for bodywork, tyres and suspension. However, EV work requires specialised knowledge of high-voltage systems, battery assessments and model-specific components. Carsome can inspect EVs but cannot repair or replace individual battery modules. It sends those cases to manufacturers, particularly when vehicles remain under warranty.

The most immediate opportunity may be a more mature used-EV market. Consistent and safe vehicle assessments could give buyers greater confidence. Hybrid experience may also help parts vendors move into EV components. These routes will not remove every barrier, but they can build skills, trust and local capability over time.

The Malaysian government is trying to connect domestic companies with EV production. In May 2025, the Malaysian Investment Development Authority brought 23 local parts suppliers and 12 technology suppliers together with Chery. The effort resulted in four commercial agreements covering components, technology transfer and joint investment.

Carmakers are also building local capability through electrification programmes. Aiman Abdullah said experience with high-voltage systems in hybrids could help vendors move into EV components. BYD, meanwhile, partnered Inokom to assemble passenger vehicles at an existing facility in Kulim, Kedah, after dropping plans for a Tanjung Malim assembly plant.

Suppliers need predictable decisions from Putrajaya and carmakers before committing money. Vendors typically need six to 18 months to prepare for full-scale production, while investments take about a decade to pay off. Stable policy and clearer planning can therefore determine whether smaller firms risk scaling up.

An EV is technically different from a petrol car because it depends on an electric drive system, a battery and high-voltage equipment instead of relying mainly on a conventional combustion engine. The article highlights batteries, high-voltage systems and model-specific components as specialised areas. These require capabilities that many traditional parts suppliers may not yet possess.

The barrier is visible in servicing. Malaysia has an established ecosystem for bodywork, tyres and suspension, but EV battery assessments and high-voltage work are more specialised. Carsome can inspect EVs but cannot repair or replace individual battery modules, sending those cases to manufacturers. Proprietary components can also restrict independent suppliers’ access to designs and replacement parts.

The transition therefore requires more than retooling a factory. Smaller firms may have technical expertise but lack the money to scale up. Hybrid programmes can provide experience with high-voltage systems, while technology-transfer agreements may build skills. Stable policies are needed because investments take about a decade to pay off.