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Budget 2020: Steering towards adoption of electric vehicles a shift in Govt focus, say experts

SINGAPORE — Transport and energy analysts support the new subsidies announced by the Government to encourage Singaporean drivers to switch to electric vehicles (EVs), but said that the availability of charging points is crucial to get more drivers on board.

A BlueSG electric car being charged. Transport analysts said that public charging points can be installed faster and be more widely distributed around the island to nudge drivers to make the switch.

A BlueSG electric car being charged. Transport analysts said that public charging points can be installed faster and be more widely distributed around the island to nudge drivers to make the switch.

SINGAPORE — Transport and energy analysts support the new subsidies announced by the Government to encourage Singaporean drivers to switch to electric vehicles (EVs), but said that the availability of charging points is crucial to get more drivers on board.

On Tuesday (Feb 18), Deputy Prime Minister Heng Swee Keat announced a variety of measures during his Budget speech to encourage Singaporeans to switch to cleaner, greener cars as part of the nation’s fight against climate change.

Among these are a rebate of up to 45 per cent on the additional registration fee for buyers of EVs, and the expansion of public charging infrastructure for EVs from 1,600 today to about 28,000 by 2030.

Associate Professor Walter Theseira, a transport economist from the Singapore University of Social Sciences, said that to some extent, the new measures signalled a shift in the Government’s focus to get people to switch to public transport as the most effective way of reducing carbon emissions.

“Any personal motor vehicle, no matter how efficient, will always be less green than taking public transport. That’s why I think the Government’s stance previously was that the best way to mitigate the effect of emissions is to encourage people to use public transport,” he said.

Professor Subodh Mhaisalkar, executive director of Nanyang Technological University’s Energy Research Institute, agreed. He added that until the Land Transport Authority completes its goal to put eight in 10 Singapore households within a 10-minute walk of a train station by 2030, there will still be some people who want to drive.

“Naturally, as mass transit becomes more accessible, the need to own cars will really diminish. But, if you must drive a car then it makes sense to drive an EV,” he said.

In his Budget speech, Mr Heng said that the Government is placing “a significant bet on electric vehicles and leaning policy in that direction because it is the most promising technology”.

Noting that taxi drivers spend more time on the road than private car owners, Professor Subodh said that he would have also liked to see greater incentives for taxi operators to convert their fleet of vehicles into fully electric ones.

Assoc Prof Theseira said that the measures to encourage Singaporeans to adopt EVs show that the Government acknowledges that personal motor vehicles will be here to stay and that the transition to alternative fuel will happen at some point.

“I think the emphasis on switching to public transport is still there… but this year’s Budget recognises that the transition of privately owned fleet to EV has to happen at some point and it’s just a matter of when and how,” he added.

INCREASING THE NUMBER OF CHARGING POINTS

The measures may signal the Government’s commitment towards fighting climate change, but the analysts hope that public charging points for EVs can be installed faster and be more widely distributed around the island to nudge drivers to make the switch.

Assoc Prof Theseira described the 2030 target to set up public charging points as “quite slow”, adding that the Government would have to ramp up its efforts.

Dr Sanjay Kuttan, the chairman of the Sustainable Infrastructure Committee of Sustainable Energy Association of Singapore, said that having 28,000 charging points would help to overcome the lack of infrastructure that now deters people from buying such cars.

“The number is good but the key is how the 28,000 charging points are distributed. It has to be based on people’s movement such that it maximises people’s usage. There’s no point if all the charging points are located in some place like Kranji,” Dr Kuttan said.

Echoing this view, transport analyst Terence Fan from the Singapore Management University said that Singaporeans who work in far-flung parts of the island may be less receptive to the idea of going electric if they do not have the assurance that they can keep their vehicles charged and ready to be used at any time.

Dr Fan is also not sure if 28,000 is a sufficient number of charging points.

He pointed out that even now at public car parks with electric charging points, there are just a handful of them — which becomes problematic when an EV owner arrives and finds all of these charging stations occupied.

To make EVs a “massive new thing”, he said that existing public car parks will need to be redesigned in such a way that EV owners can charge their vehicles no matter where they park.

Tesla founder Elon Musk had last year criticised Singapore for being slow to adopt EVs. When asked by news agency Bloomberg to comment on this, Mr Masagos Zulkifli, Minister for the Environment and Water Resources, said then: “What Elon Musk wants to produce is a lifestyle. We are not interested in a lifestyle. We are interested in proper solutions that will address climate problems.”

Mr Masagos added that it would be difficult to develop enough charging stations with 85 per cent of the population living in high-density public housing. “Just choosing a parking spot is already problematic. ” 

IMPACT OF REVISED ROAD TAX ON ELECTRIC CARS

On Tuesday, Mr Heng also announced that the road tax methodology for cars will be revised from January 2021 to better reflect the current trends in vehicle efficiency.

The transition towards EVs will have a major impact on tax revenues, he said.

Fuel excise duties today yield S$1 billion a year and form a significant contribution to Government revenues. However, EVs are not subject to fuel excise duties.

Mr Heng said that the Government plans to have a usage-based tax on EVs as an alternative to fuel excise duties. Until the technology to do so is available, the Government will impose a lump-sum tax that will be built into the road tax schedule for EVs to partly account for the loss in fuel excise duties.

This will be phased in over three years, starting from January next year. The full amount will be imposed by January 2023.

When asked if the lump-sum tax could discourage buyers from choosing EVs, Dr Kuttan said that this would depend on whether the cost of the tax negated the incentives available for buyers. These incentives include the 45 per cent rebate offered under the new early adoption incentive for EVs, as well as rebates under the Vehicular Emissions Scheme.

COE CATEGORY FOR GREEN CARS

To encourage car buyers to choose EVs, Dr Kuttan suggested that a separate Certificate of Entitlement (COE) category be set up for EVs and hybrid cars.

At the moment, such vehicles are parked in the same COE categories as other cars, driving up COE prices.

Having a separate category for greener cars could reduce the COE and the overall cost of these cars, encouraging more people to buy them, he said.

Prof Mhaisalkar is still uncertain if the incentives offered would be enough to sway car buyers to go for EVs.

He said that buyers in the luxury car market are more likely to be attracted by upfront rebates, but those looking for something affordable are likely to be more sensitive to the total cost of ownership. Until this second group sees that petrol or diesel-fuelled cars are no longer cheaper than EVs, the move to adopt cleaner solutions will not accelerate.

The authorities could consider adjusting the petrol tax upwards, he suggested. “That is a drastic move that needs a lot more studying, but some bold moves would need to be seen.”

Related topics

environment climate change electric cars Budget 2020

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