KUALA LUMPUR: Tesla Inc coming to Malaysia means it will be a three-way fight to host the US electric vehicle manufacturer's manufacturing hub in Southeast Asia.

It was announced this week that Tesla had been given the approval to import battery electric vehicles (BEV) into Malaysia. 

The "Elon Musk" company will be setting up a head office in Malaysia, as well as a network of Tesla superchargers, Tesla Experience centres and service centres.

MIDF Research analyst Hafriz Hezry said Tesla would likely be focusing in the first two years mainly on market testing and EV charging network development before coming to a decision on its regional manufacturing hub of choice, 

which Indonesia and Thailand had also been vying for. 

Hafriz noted that Tesla had recently established Tesla Thailand (for distribution) as part of its expansion in Asean with the first supercharger station launched two days ago.

Thailand started an EV subsidy program late last year, which is coupled with EV tax incentives including excise, import and road tax reduction. 

Meanwhile, Indonesia has been aggressive in attempts to attract Tesla's investment into local production, including offering a concession to mine nickel, a key ingredient in lithium-ion battery cells.

Indonesia holds the world's largest nickel reserve with up to 25 per cent global share. 

Other incentives offered by Indonesia include tax breaks and a subsidy scheme for EV purchases to build a market for Tesla in the country.

The biggest competition obviously was coming from Indonesia, Hafriz said.

"Indonesia has the advantage of large nickel reserves and aggressive approach to attracting investments into battery cell manufacturing, as well as a significantly larger population and total industry volume. 

"Malaysia on the other hand, boasts a robust E&E supply chain coupled with much higher per capita income which could drive relatively faster BEV adoption – high BEV cost currently is a stumbling block to BEV ownership in most Asean countries."

He added that despite Malaysia's relatively smaller population, it wss currently the third largest auto market in the region.