Insas jumpstarts electric Tesla leasing business

  • From left : GreenTech Catalyst CEO Tuan Syed Ahmad Syed Mustafa, Ahmad Hadri, Weng Sheng and PRAC Logistics Sdn Bhd director Gerard Monteiro at the Tesla electric car media event Suhaimi Yusuf
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This article first appeared in The Edge Malaysia Weekly, on December 26, 2016 - January 1, 2017.


INSAS Bhd has teamed up with Malaysian Green Technology Corporation (GreenTech), a government entity, to import electric vehicles (EVs) into the country. The joint venture will bring electric Tesla models onto the roads under a leasing scheme. Tesla Motors is the manufacturer of the EVs.

“We believe electric vehicles are the future. That’s why we are venturing into this [business]; we are making a strategic decision.

“We paid RM4.5 million upfront to bring in 10 Tesla EVs,” says Insas director Thong Weng Sheng,  who heads the car hire and fleet management operations of the group.

Insas and its 55% indirect subsidiary, PRAC Logistics Sdn Bhd, have entered into an agreement in June with GreenTech Catalyst to formalise the collaboration.

“When it was announced earlier this year that Malaysia would bring in 100 Tesla cars, it was not revealed that it had to be privately financed. There was no government grant. As such, we needed to find a suitable partner who was willing to go into this new area,” says GreenTech group CEO Ahmad Hadri Haris in an interview with The Edge.

“We talked to various parties and found that Insas is a suitable partner. The company is in the car leasing business and understands the business model. Besides, Insas also sees a great opportunity to venture into this new field of leasing electric cars,” he adds.

Insas’ retail trading and car rental segment’s revenue grew 87% year on year to RM65.23 million, contributing 24% to the group’s total revenue for the financial year ended June 30, 2016 (FY2016). The profit before tax increased 143% y-o-y to RM6.1 million.

In a note to shareholders in its FY2016 annual report, Insas’ deputy chairman and CEO, Datuk Seri Thong Kok Khee, states that the group’s limousine and car rental business (Roset in Singapore and PRAC in Malaysia) contributed significantly to the group, but its retail arm, Melium, is facing a slowdown.

The group also holds a 22.8% stake in ­Inari Amertron Bhd Group — the largest semiconductor company in Malaysia in terms of market capitalisation.

For the Tesla EVs, Weng Sheng says maintenance, road tax and tyres are covered under the monthly leasing fee.

“If you were to buy your own Tesla, you would have to pay tax and duty as opposed to leasing it from us. So, if you were to buy a Tesla EV costing RM450,000, you would end up paying about RM700,000 in full cost.

“The car will also not come with Tesla warranty/software support. If you were to lease it from us, it will cost about RM10,000 to RM12,000 a month for a two- to four-year contract. This works out to about RM240,000 to RM576,000,” explains Weng Sheng, the son of Kok Khee.

When asked if Malaysians will go for the leasing model, Ahmad Hadri says, “Most people change their cars after five years, anyway. We need to educate the public on this model. An electric car user will save about 70% on petrol cost. Additionally, leasing electric car will also save you on maintenance cost,” he adds.

The number of EVs on the roads has been rising. A total of 487,176 cars had been registered under the EV category, and this has increased to 666,674 in 2015.Of this, 591,298 were passenger cars. In 2022, research shows 10 million electric cars are expected to hit the roads, according to GreenTech.

Ahmad Hadri notes that electric car users are worried about driving such cars for longer journeys.

“Whoever drives an electric car will always have this anxiety. That’s why we are working on increasing the number of charging stations nationwide. Today, you can even charge in shopping malls. If you want to drive from the Klang Valley to Johor, there are charging stations at petrol kiosks along the highway. You can charge for free,” he says.

“There are now 121 charging stations nationwide set up by GreenTech and this is expected to increase next year,” he adds.

Ahmad Hadri says the cost of a charging station is about RM25,000 per system. “We have two systems — one is a slow charger and the other a fast charger,” he says. 

“It’s a chicken and egg situation; you can’t have electrical vehicles without charging stations, but you can’t have charging stations without electrical vehicles,” adds Weng.

Statistics show that the transport sector consumed the most energy, says Ahmad Hadri.

“It is the highest consumer of energy compared to others like the industrial sector. The issue here is that we are wasting a lot of energy because of transport. Electric vehicles are more efficient users of energy. But we need sufficient charging stations,” he says.

“We started this project in 2014. The challenge for us was to find building owners who were willing to put up electrical chargers because they had to give us a parking lot for free and absorb the operating charges. However, we do pay the capital expenditure,” he adds.

But given time, Ahmad Hadri says more owners will be willing to install charging stations in their buildings.

“If they do this, they will achieve green building ratings and earn bonus points. We were very fortunate to have pioneering partners like The Curve, which provided two parking lots for the chargers,” he says.

Malaysia aims to install 25,000 electrical vehicle chargers in public areas by 2020.

GreenTech’s Ahmad Hadri says there is growing interest in the green business despite the more challenging operating landscape.

“This is supposed to be a more challenging year, but we can see interest [picking up in this business]. Business leads [getting prospective customers through trade shows] worth RM2.22 billion were recorded at the IGEM 2016 [Seventh International Greentech & Eco Products Exhibitions & Conference Malaysia]. This is an improvement from the RM1.98 billion achieved in 2015,” he says.

“There were 33,903 visitors and 350 exhibitors from 33 countries … all surpassing the previous years’ records,” he adds.

Ahmad Hadri also notes that in 2014 and 2015, IGEM had recorded accumulated business leads of close to RM2.8 billion. Of this, about RM610 million has already been realised. This was mainly from renewable energy and energy efficiency projects, he says.

During IGEM2016, GreenTech has forged six partnerships worth about RM130 million. The partners include BMW Malaysia, Petronas Dagangan Bhd and the organiser of the International Electric Vehicle Expo.