Proton targets register sales of 10,000 smart #1 units by 2027.
Proton targets register sales of 10,000 smart #1 units by 2027.

Proton plans to launch the smart #1 electric sport utility vehicle (SUV) in Malaysia in the final quarter of next year.

While this may seem like a late entry, it does coincide with the expiry of tax breaks for fully imported battery electric vehicles (EVs) next year.

Given the increasing interest globally in all things electric, the government has realised that the transition needs to be well managed in order to ensure the local automotive industry can continue to thrive when electrons rule the pump.

Proton's decision to launch the smart brand at the tail end of next year would not have been one that it took lightly, given that the tax breaks are expected to expire shortly after its vehicles have hit the market.

In announcing the move, DRB-HICOM Bhd group managing director Datuk Seri Syed Faisal Albar also made a public appeal for an extension of EV incentives.

Proton is not alone as other brands have also made similar appeals to the government, citing the need for a stable environment in order to plan for the EV transition properly.

Many industry players cite the government's past policy on hybrids as an example of how a short-term tax break cannot really encourage change.

In hindsight, the fleeting tax breaks for imported hybrid vehicles did not do the local automotive industry much harm as almost everyone agreed that it was a transitional technology to pave the way for EVs.

Electric cars are generally accepted as the next step in automotive technology, although there are still some discussions about carbon neutral fuels among manufacturers of high-performance sports cars.

Sales of EVs breached 10 per cent of total vehicle sales globally last month, with some suggesting that it was as high as 15 per cent.

Technology trend experts said the point of no return for any new technology was when it reached around the 12 per cent mark in terms of global adoption.

Once it does, it would likely take around a decade before completely replacing the existing technology.

That may seem a little far-fetched at the moment but changes in technology are felt much in the same way as tsunamis - starting from the point of the quake and spreading out.

The centre of change is in the United States with Tesla and China with its many EV manufacturers.

With China coming up with more affordable electric cars every day, the global EV scene is just about ready to "invade" all markets. There are very few ways to block this march.

While sceptics continue to point out that there is a serious lack of charging infrastructure, what they actually mean is there is a lack of DC fast chargers for long distance drives.

While charging infrastructure is more advanced in Europe and China, it is still far from sufficient to support wholesale adoption of EVs.

There has been a strong demand for EVs that even the most optimistic of EV brands, Tesla, has been caught by surprise.

In fact, Proton's target to register sales of 10,000 smart #1 units by 2027 - with the car only entering the market in the final three months of next year and that the first year's target is just 1,000 units - mean that by 2027, the national carmaker is expecting to sell around 5,000 units in the final 12 months of that period.

Such an aggressive target is surely an indication of Proton's confidence in the product and reliability of the EV trend. This alone presents a strong case for an extension of the EV tax incentives, even for fully imported models.

In fact, some industry players are already asking for extensions till 2027, with tax breaks for locally assembled EVs until at least 2030.

While Proton will likely succeed in getting the tax break extension, there is still the question of whether it would be able to sell 10,000 EVs by 2027, given that the management team has hinted that the pricing will reflect the premium nature of the product.

Built on Geely Group's Sustainable Electric Architecture, the car is designed by Mercedes Benz as part of their collaboration after Geely acquired a majority interest in the smart brand from the Stuttgart stalwart.

Early reviews from Europe seem to confirm that the product has premium quality and sufficient design flair to command higher-than-average pricing.

Proton Edar chief executive officer Roslan Abdullah said it might be a bit of a stretch to price the vehicle below RM150,000 and he even hinted that the target buyers were those who could see themselves in cars priced above RM200,000.

From that, it is probably safe to assume that the pricing will be designed to take on premium brands such as MINI.

While this pricing is not considered mass market-friendly, it sits rather well among the competition. Still, it remains to be seen if the smart brand itself is strong enough to command such market respect.

It is worth pointing out that the brand did rather poorly when it was distributed by Mercedes-Benz Malaysia but that could be because it was a rather confusing proposition.

In the EV space, the most important criteria seem to be the specifications, more specifically specifications related to connectivity and modern user interface with sufficient intelligent software assisting drivers and enhancing passenger experience.

This is quite evident in the China market, where EVs from traditional German luxury brands are struggling to command the market with buyers preferring Tesla and Chinese brands that offer higher levels of automation and connectivity features.

Proton Edar, which is the official distributor of the smart brand in Malaysia, has a tough job ahead as it is entering a new space with a new brand and new product, a trifecta that has the potential of swinging wildly either way.

With this announcement and the target set, the transition has been set in motion for the industry, even those players who are reluctant will be forced to re-examine their business plan moving forward.

It is understood that both Proton and Perodua (Perusahaan Otomobil Kedua Sdn Bhd) are working on a similar timeline that will see both brands offering battery EVs before the decade is out.