Talks on 3rd national car to conclude this month

by RAHIMI YUNUS / pic by TMR

THE government is expected to conclude negotiations on the new national car project (NNCP) with the shortlisted carmakers by month-end, clearing a major hurdle in the production of the country’s third vehicle brand.

Negotiations with the final shortlisted two companies were initially targeted to be completed last month, but intricacies of the deals pushed all parties to extend the deadline.

An industry insider said talks with the companies have dragged on longer than what was expected due to the complexity of the project.

“It is still in the negotiation process. The government is working to conclude the talks by the end of May,” the source, who asked not to be named as the discussions are confidential, told The Malaysian Reserve (TMR).

The Malaysian Industry-Government Group for High Technology is leading the discussion, together with the Ministry of International Trade and Industry, Malaysian Investment Development Authority and Malaysia Automotive, Robotics and IoT Institute.

The industry source said Prime Minister (PM) Tun Dr Mahathir Mohamad will announce the partners once all the related negotiations have been completed.

But, the source did not rule out that negotiations could be prolonged due to the difficulties of the talks. Decisions would largely depend on what could transpire in the next few weeks.

A single vehicle requires more than 5,000 parts to assemble. Any carmaker will need to have the correct ecosystem to support the production of vehicles.

Dr Mahathir, who mooted the idea of the first national car Proton Holdings Bhd about four decades ago, was widely criticised for mooting the creation of another national car project when he became the PM for the second time.

Dr Mahathir defended the initiative by claiming that Malaysians were more concerned about buying instead of creating, and that the country needed to learn from various engineering fields related to car manufacturing.

Last December, TMR reported that major auto brands and international companies submitted proposals to develop the national car despite widespread objections on the feasibility of the project.

Putrajaya had received submissions from over 20 interested parties including foreign carmakers. But news reports speculated companies to be shortlisted were from Asia, Japan, China and South Korea — Asia’s major car producing countries.

Entrepreneur Development Minister Datuk Seri Mohd Redzuan Md Yusof (picture) had said two companies had been shortlisted for the NNCP and hinted that the Look East Policy was featured in the selection of the companies.

Mohd Redzuan previously told TMR that the new car project would be an energy-efficient vehicle (EEV).

Industry observers viewed that Toyota Motor Corp Ltd and Nissan Motor Co Ltd are among Japanese automakers that could be the leading contenders.

“It is difficult to ascertain which specific auto manufacturers the government is negotiating with. The government is adopting a machine gun approach and seeking to shortlist the partners,” an industry source told TMR.

The Renault SA-Nissan-Mitsubishi Motors Corp alliance is the world’s largest automotive manufacturer and the global leader in electric vehicles (EVs).

Nissan Leaf is currently the world’s best-selling EV with over 400,000 units sold since its launch in 2010, though US-based rivals Tesla Inc’s Model 3 and General Motors Co’s Chevrolet Bolt are catching-up.

Meanwhile, Toyota and Suzuki Motor Corp have forged a partnership to produce EVs and compact cars on a greater scale.

In August last year, a local English daily reported that two Chinese EV industry players — GSR Capital and Envision Energy — have proposed to invest US$10 billion (RM41 billion) in the third national car project.

It was reported that the companies were keen to build a regional automobile hub in southern Perak, near Proton City in Tanjung Malim.

Envision Energy is the majority owner of Nissan’s rechargeable battery unit Automotive Energy Supply Corp (AESC), which now operates a holding company, Envision AESC Japan, with Nissan in an 80-20 split.

Earlier, Nissan abandoned a US$1 billion deal to sell AESC to GSR Capital.

Global automakers are intertwined in alliances and partnerships to achieve economies of scale to develop EVs and those from Japan and China have set their sights on Malaysia to grow EVs and be a partner.

“In view of the economic situation, Chinese companies have a favourable opportunity. They may offer far more benefits and competitive products to secure this project,” an industry source said.

Malaysia could be a key market as it will open up the door for the brand to penetrate South-East Asia, a growing market with 600 million populations.