Malaysia is standing at a pivotal moment in its pursuit of a cleaner, more resilient economy. With the government pledging carbon neutrality by 2050, the country is accelerating its adoption of electric vehicles (EVs) and energy storage solutions.

At the heart of this transformation lies the battery, the linchpin technology shaping the pace and direction of the nation’s low-carbon future.

Despite growing enthusiasm, Malaysia’s battery sector remains young. According to Dr. Rezal Khairi Bin Ahmad, CEO of NanoMalaysia Berhad (NMB), “The lithium-ion based battery industry in Malaysia is still at its infancy stage and primarily driven by foreign direct investments and technologies from abroad, leaving little room for local intellectual equity.”

The government’s decision to grant tax exemptions on completely built-up (CBU) battery electric vehicles (BEVs) until 2025 has spurred consumer uptake. Yet Dr. Rezal cautions this is only a short-term measure: “While it is a great catalytical start, it is not sustainable. With global supply chain uncertainty due to current geopolitical situation, the country requires a long-term game plan to ensure local technology and commercial ownership.”

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Recognising these vulnerabilities, NMB has led the launch of the NanoMalaysia Energy Storage Technology Initiative (NESTI) in 2022, part of the 12th Malaysia Plan.

“A key result manifested in the form of a commercially viable lithium-ion battery technology with 60 per cent energy density advantage over current market offerings,” Dr. Rezal says.

This breakthrough supports plans for a Gigafactory Malaysia, an industrial-scale production hub that could anchor the nation’s role in EV and battery supply chains. Beyond cars, the opportunity is even broader.

“The growth in low carbon mobility market and push for the national grid and renewable energy sector to adopt battery energy storage system (BESS) present demand for locally produced batteries,” he adds.

Circular economy as a resource strategy

Malaysia’s limited natural reserves of lithium, nickel, manganese and cobalt present a fundamental challenge. To address this, NMB is turning to sustainability-driven innovation.

“In the absence of naturally resourced battery materials, circular economy approach is adopted to extract lithium, nickel, manganese and cobalt and upcycle graphite from biomass. The relevant process technologies are all developed in-house,” Dr. Rezal explains.

Such an approach reduces dependency on imports while aligning with global climate goals. Still, scaling up requires significant capital. “The next crucial step would be securing investments to fund the scale-up activities,” he notes.

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A potential pitfall lies in repeating past mistakes. “Having observed the way how the solar panel industry had developed in Malaysia, unchecked market entry of foreign players and technologies in the domestic battery market may stifle the deployment of local innovations,” Dr. Rezal warns.

He believes the solution is a careful mix of incentives: “There is a need to strike a balance between FDI-centric industrial development and incentivising and activating domestic direct investments to support the commercialisation of home-grown batteries.”

His preferred approach, dubbed the “Build Some, Buy Some” philosophy, emphasises parity between imported and local energy storage components.

Looking ahead to 2026

The future of Malaysia’s battery industry may not revolve around lithium alone. “We are looking ahead in developing new battery chemistries based on aluminium and sodium ions to reduce dependency on global lithium supply chain,” Dr. Rezal says.

Other promising avenues include solid-state electrolytes and nanomaterials that could boost energy density, reliability, and safety. Meanwhile, government-backed initiatives such as EMERGE (Enabling Mobility Electrification for Green Economy) and the approval of the ICE-to-EV conversion white paper in 2024 underscore Malaysia’s commitment to developing critical EV technologies.

By 2026, Dr. Rezal expects several industry-shaping shifts.

“Further drop in battery prices in terms of USD/kWh due to over-supply of LFP batteries in the market, greater deployment of batteries (BESS) for renewables, an increase in localisation of manufacturing and re-emergence of interest in NMC battery chemistry with improved energy density, capacity retention, reliability and safety.”

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Image Credit: Dr. Rezal Khairi Bin Ahmad

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