Electric car makers like Tesla and BYD Co. have achieved good sales revenue in Hong Kong, in the mainland and in the US. However, it remains unclear whether such strong sales momentum is sustainable as subsidies or tax breaks become less favorable.
Tesla rolled out its first electric car model Roadster in Hong Kong in November 2010. The model has a sharp design and top speed of 201 mph. The luxury sedan, priced at HK$1.07 million, could reach 100 mph in four seconds.
Nearly 30 Roadsters were sold during the first six months after the launch. Buyers were granted a 100 percent waiver on the first registration tax.
Official data shows that there were 2,807 Tesla sedan owners in 2016, making it the city’s fifth best selling brand after Honda, Mercedes-Benz, Toyota and BMW.
However, the US car maker has suffered a severe setback in Hong Kong this year after the government decided to slash tax incentives on purchases of new electric vehicles.
Tesla cars were once eligible for full exemptions but now the tax break has been capped at HK$97,500 since April 1.
A large number of car buyers have rushed to buy before the policy took effect. Newly registered Tesla cars soared to 2,939 in March this year, four times that in the month before and exceeded the full-year volume of 2016.
Sales of Tesla have plunged since then. In April and May, the company put up fat zeros in Hong Kong. Registrations hit four in June, two in July, and zero again in August, according to the Transport Department.
China may also move to cut subsidies for electric vehicles next year, which may pose a real threat to makers like Tesla and BYD.
It’s estimated that the Chinese authorities might slash subsidies by 40 percent to 30,000 yuan from the previous 50,000 yuan. The move may have considerable impact on domestic electric cars, which are priced between 100,000 yuan and 200,000 yuan.
In the US, the federal government offers up to US$7,500 in subsidies for each new electric vehicle buyer. However, the tax credit is available only to the first 200,000 qualified electric vehicle buyers of each individual manufacturer. Tesla has almost exhausted this quota, which means next year will be a testing time.
This article appeared in the Hong Kong Economic Journal on Nov. 30
Translation by Julie Zhu
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