Sustainable Mobility: Evaluating the Economic Benefits of Electric Vehicle Transition in Malaysia

Abstract

The transition to electric vehicles (EVs) is a pivotal step towards achieving sustainable transportation and enhancing energy security. This study assesses the economic impact of the EV transition on the Malaysian economy using Input-Output (I-O) analysis. The research is structured around three key scenarios: (1) the reduction in petroleum demand due to EV adoption, (2) the shift from traditional internal combustion engine (ICE) vehicle manufacturing to EV production, and (3) the impact of EV adoption on land transport services. Results indicate a modest net GDP increase of 0.24%, primarily driven by the expansion of EV manufacturing and the electricity sector. While new job opportunities in the EV and related industries (5.97 thousand new jobs) partially offset job losses in the petroleum and traditional vehicle manufacturing sectors, a structural shift in the labour market is evident. To mitigate these impacts, we recommend implementing comprehensive worker retraining programs, developing balanced investment strategies, reevaluating government subsidies and incentives, and investing in R&D and Innovation. These findings provide a crucial foundation for policymakers to facilitate a smooth and sustainable transition to EVs in Malaysia.