22 April 2019
Buyers of this Tesla model and other electric cars will now have to shoulder 80 percent of the tax payable. Photo: HKEJ
Buyers of this Tesla model and other electric cars will now have to shoulder 80 percent of the tax payable. Photo: HKEJ

Tesla falls victim to Paul Chan’s budget

Former financial secretary Antony Leung used to love Lexus, but Paul Chan, the latest official to succeed him in the post, apparently has no regard for Tesla.

That is perhaps why in his first (and possibly last) budget, Chan proposed to drastically reduce the tax waiver for electric cars.

That’s also why Tesla was reported to have sold a dozen new models while Chan was delivering his speech at the Legislative Council on Wednesday.

Before his speech, a Tesla Model X75D cost HK$850,000. Now it costs HK$1.51 million because the first registration tax waiver on electric cars would be kept at HK$97,500.

In other words, a Tesla owner now has to absorb 80 percent of the tax payable.

Why the government has suddenly abandoned its first registration tax waiver on electric cars, a policy it has adopted over the past 23 years, remains a mystery.

But it definitely brought a lot of disappointment to local environmental groups and, of course, to Tesla and other electric-car makers.

There are 7,434 electric vehicles running on the streets of Hong Kong, or less than 1 percent of the total number of registered vehicles (810,000) in the city as of the end of last year. 

But the switch to electric cars is an emerging trend – and a welcome development as far as environmental protection is concerned – as reflected in the 20-fold increase in the number of electric vehicles registered last year, from 2013, according to data from the Environmental Protection Department.

The switch is also a result of the narrowing price gap between an electric car and its traditional rival, and that might have prompted the traditional car manufacturers to seek help from the financial secretary.

Still, the new policy appears to go against the worldwide trend towards electric cars, especially in China, where there is talk that Beijing motorists will be limited to driving only electric cars in the smog-choked capital.

Dr. Man Chi-sum, chief executive of the environmental protection NGO Green Power, criticized the government for not giving the policy a deeper thought, adding that it did not offer other options for consumers.

Instead of reining in the growth of the traditional car industry, which adds 20,000 gasoline-powered units in the city every year, the government chose to kill the new electric car sector, which has been growing at only 2,000 units per year.

Man expects the volume of electric vehicle sales to decline sharply as the number of traditional cars in the streets grows rapidly.

A spokeswoman for Tesla expressed disappointment at the government’s decision to withdraw support for electric cars, saying it threatens to move Hong Kong backwards.

To be sure, this is not the first case that shows how the government can make or break new economy players.

Eighteen months ago, police arrested five Uber drivers in a high-profile crackdown on unlicensed transport services in Hong Kong, although it had earlier endorsed the car-hailing app as a “success story”.

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EJ Insight writer

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