Analysing the Economic and Environmental Impact of Electric Vehicle Diffusion on the Malaysian Economy

Ismaily Johari () and Nora Yusma Mohamed Yusoff ()
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Ismaily Johari: Universiti Tenaga Nasional, Kajang, Malaysia,
Nora Yusma Mohamed Yusoff: Institute of Energy Policy and Research, Universiti Tenaga Nasional, Malaysia.

International Journal of Energy Economics and Policy, 2026, vol. 16, issue 2, 392-406

Abstract: The transition to electric vehicles (EVs) is increasingly viewed as a key strategy in decarbonising the transport sector, with far-reaching implications for national economies and energy systems. This study evaluates the macroeconomic, employment and environmental impacts of large-scale EV adoption in Malaysia using an environmentally extended input-output (EEIO) model. Two scenarios are evaluated for the different EV share targets (30%, 50% and 80%): (i) a shift in demand from petroleum to electricity due to EV use, and (ii) a structural transformation of the vehicle manufacturing sector from internal combustion engine (ICE) to EV. The results reveal modest benefits from fuel substitution alone, but larger gains from transitioning to EV manufacturing. However, the environmental gains remain limited without decarbonising the electricity mix. The study highlights critical trade-offs and emphasises the need for coordinated policy strategies linking transport electrification with clean energy deployment, labour market transition support, and green industrial development. These findings offer evidence-based guidance for managing Malaysia's low-carbon mobility transition in line with economic and climate policy objectives.

Keywords: Electric Vehicles (EVs); Input-Output Analysis; Malaysia; Energy Transition; Employment Impact; Green Manufacturing; CO2 emissions; Macroeconomic modelling; Low-carbon mobility; Environmental policy (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ2:v:16:y:2026:i:2:id:20846

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DOI: 10.32479/ijeep.20846

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