Additional S$5k ARF rebates, 60,000 public EV charging points by 2030 and increased petrol duties aim to persuade motorists in Singapore switch to electric and hybrid vehicles

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SINGAPORE

Singapore’s Deputy Prime Minister and Finance Minister Heng Swee Keat has announced that the government is putting its faith into electric vehicles for Singapore, and is developing a robust infrastructure for their use here.

He stated during the Budget 2021 speech that based on current research, it is the most promising clean energy technology for vehicles in Singapore, and a series of updated initiatives are being rolled out to encourage drivers to make the switch. 

There are now plans to construct 60,000 high-capacity public charging points for electric vehicles island-wide by 2030, up from the original projection of just 28,000 points within the same time period announced last year. 

DPM Heng also announced that S$30-million will be budgeted for electric vehicle incentives here, spread out over the next five years. 

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For everyday drivers one of the biggest takeaways from the Budget 2021 speech is that there is no longer a minimum S$5,000 Additional Registration Fee (ARF) floor for battery electric vehicles (BEVs). This means less expensive BEVs will now benefit from price drops – previously only more expensive BEVs were able to net the fullest rebates.

Thiese rebates came into force in 2021: Firstly the Electric Vehicle Early Adoption Scheme, which has a maximum rebate of S$20,000 for BEVs, as well as the enhanced VES scheme which adds a maximum of S$25,000 for BEVs with an A1 VES rating.

Vehicles in the A1 band must emit zero particulate matter – or soot and smog – and so only battery electric vehicles (BEVs) like the MG ZS EV and Nissan Leaf fit into this category.

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DPM Heng stated that the zero ARF floor policy will run from January 2022 to December 2023, after which there will be another review based on upcoming clean energy technologies for vehicles. 

Ron Lim, the head of sales and marketing at Nissan distributor Tan Chong Motor Sales here reacted, “This should be a positive for lower-cost EVs that currently are not able to enjoy the full VES and EEAI combined incentives due to the minimum S$5,000 ARF floor payable, which will translate to a maximum “additional” benefit of S$5,000.

However, while beneficial, it might not really move the needle much since the savings are negated any time the COE price rises by S$5,000 or more. However the higher VES incentives and EEAI that just kicked in this year have already helped make EV prices more palatable. So any additional incentives thrown in will only be a bonus to potential buyers.”

CarBuyer reported on just such a situation with the end of 2020 COE price rise effectively cancelling out rebates increases for some cars.

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To further encourage the mindset shift of motorists, DPM Heng revealed that petrol duties are being increased, with premium petrol going up by S$0.15 per litre and other grades by S$0.10 per litre.

But there’s some relief in the form of Road Tax rebates, with all standard petrol internal combustion engine (ICE) powered cars, that is, non electrics and hybrids, getting a one-year, 15 percent road tax rebate that will be calculated starting from August 2021.

DPM Heng noted that this rebate is made to cushion the impact of the higher petrol cost as motorists adapt to the idea of going electric or hybrid with their next vehicle purchase. 

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Road tax calculations, one of the most confusing and convoluted parts of onroad vehicle costs, will also be revised to give a fairer weight to petrol-electric hybrids that is based on total power rating rather than the traditional internal combustion engine capacity that is starting to look increasingly irrelevant in this age of changing tech.

Rather than go into a messy and confusing explanation, this handy chart from the Land Transport Authority shows exactly how the road tax will be calculated:

Instead of taking a degree in algebra though, you could also simply use the LTA’s own Road Tax calculator.

What about hybrids?

One notable omission is that DPM Heng’s speech had little to say about how  petrol-hybrid vehicles would be a more practical approach for many middle-class drivers rather than full electric vehicles.

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Jasmmine Wong, CEO Inchcape Singapore and Greater China, which also sells Toyota and Lexus through the Borneo Motors dealership and Suzuki through Champion Motors in Singapore, said, “The ARF reductions and S$30 million funding over EV related activities further strengthened our green drive which Borneo Motors Singapore strongly support. However it would also be great to see petrol-electric hybrid vehicles included in these initiatives so that our consumers can seamlessly transit from now until 2030 when the charging infrastructure reaches maturity and widespread availability.”

This view is echoed by Preeti Gupta, Director of Corporate Affairs of BMW Group Asia, “The Budget 2021 measures to achieve closer price parity between traditional combustion engine vehicles and electrified vehicles is a clear demonstration of the Government’s commitment to a cleaner and greener Singapore. While we believe these measures will encourage more customers to switch to electrified vehicles in the coming years, we hope plug-in hybrid vehicles are included in these measures as they are a stepping stone for customers until Singapore has a more mature charging infrastructure.”

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What motorists should keep in mind is that the powers that be are not really interested in making cars cheaper. The goal here is to temporarily reduce the entry prices of current-generation clean emissions cars to put them in a competitive price band as compared to traditional ICE cars. Then as the technology gets cheaper in the coming years, many of these rebates will be absorbed by other taxes and tariffs. 

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Remember that the government isn’t in the business of making cars cheap; it just wants the auto trade to start selling cleaner cars, and the public to adopt them quicker. 

The long term goal, as outlined by DPM Heng, is still for a car-lite society and there is already a S$60 billion budget for the next decade to expand the country’s MRT network. A usage based, tax-by-distance plan for private vehicles is still in the works as well.

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What’s clear is that the future of the standard petrol-powered internal combustion engine is already on the wane, and in the government’s ideal scenario we will all be driving BEVs and plug-in hybrids by 2030 in Singapore.

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