New EV incentive hard to boost sales
The effectiveness of a new incentive, "One-on-one replacement" scheme, launched by the Hong Kong government to promote the use of electric vehicles (EVs) and boost sales is in doubt, said industry experts.
Financial Secretary Paul Chan announced the scheme in his latest budget speech to allow eligible private car owners to enjoy a first registration tax (FRT) concession of up to HK$250,000 if they scrap a car of at least six years old and replace it by a zero-emission private vehicle.
Gordon Lam Shing-wai, the founding president of Electric Vehicle Club Hong Kong, said the scheme would not greatly lift the sales of electric vehicles. “It is too difficult to meet all standards. An old private car has to be scrapped which means the owner could only get a few hundred dollars in return. Only a small number of electric car buyers will benefit. That is not enough incentive for people to choose EVs instead of petrol cars.”
In order to enjoy the new registration tax concession, applicants have to trade in existing private cars of at least 6 years old on a one on one basis and the applicants must own the cars for 3 years or more.
The price of an electric vehicle is generally higher than a traditional petrol car, so sufficient tax concessions and subsidies by the government are necessary to stimulate people to purchase electric cars, Lam added.
Before 2017, the FRT on electric private cars was completely waived to promote wider usage of EVs. However, the government changed its policy last year and put a cap on maximum tax concessions of HK$97,500 on private electric vehicles on hopes to curb the number of private cars so as to prevent traffic congestion and roadside air pollution.
Private electric vehicle sales dropped substantially after the implementation of the low cap on tax concession in April 2017. In the following six months, there were only 49 new private EVs registered, down 96.8 percent from 1,560 registrations in the same period in 2016, according to the data from Transport Department.
Legislative Council Councilors, Jeremy Tam Man Ho also said not every EV buyer is eligible for applying the tax concession because of the car replacement criteria. He estimated the number of EV registration will not return to the highest level, which was in the fully waived FRT period.
However, Tam believed that HK$250,000 FRT concession is sufficient for the lower cost EVs. “If all EVs are completely exempt from FRT, it would be seen as subsidies for luxury goods,” said Tam.
The Hong Kong Institute of Certified Public Accountants had urged the government to increase the amount of tax allowance on the concession of FRT on EVs. “If the concern is that electric cars are not replacing petrol- and diesel-engine cars, but only adding to the overall number of private vehicles on the road. Then, the maximum FRT waiver could be reserved for people who trade in an old petrol car for an electric car,” CPA said in a statement before the scheme was announced.
CPA emphasized the importance of long-term impact on the environment and the quality of life of the population. The government also said, “In order to balance growth and sustainability, we recommend that attention should be given to the promotion of green measures.”
Urging for more public EV chargers
Derek Poon Kwok-ching, a member of Hong Kong Business Accountants Association, believed that the “One-for-one replacement” scheme will be effective for the promotion of electric car. He also said, “Apart from the first registration tax, the appropriate infrastructure for electric vehicles is another determinant for drivers.”
At the end of 2017, there were 1846 EV chargers, which supplied electric energy to recharge electric vehicles, covering all 18 districts in various types of buildings for public use. Lam said that these EV chargers have already included those installed by automakers only available for EVs of their own brands.
According to the data from Environmental Protection Department, there are 282 chargers provided by Tesla, the leading EV brand. Drivers who are using electric cars from other brands have to rely on public chargers. Therefore, potential buyers should consider charging arrangements before buying EVs.
The CPA agreed that including ready access to charging stations is necessary. As the increase in the number of electric charging stations is slow, it suggested exploring tax incentives for commercial car parks to install more charging stations for electric vehicles.
To raise the number of public chargers, Tam suggested that the government should install new parking meters with EV charging function to replace the existing ones.
《The Young Financial Post 新報人財經》
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