Tax breaks alone won’t promote e-mobility

June 14, 2018 12:14
Compared to cities like Berlin and Beijing, Hong Kong lags behind in terms of official EV policy and infrastructure. Photo: Reuters

E-mobility has become a major trend worldwide as take-up of electric vehicles (EVs) and new initiatives to promote cleaner drives show no sign of stopping.

In Hong Kong, there are approximately 11,100 EVs today, compared with fewer than 100 in 2010.

In this year’s budget, electric car buyers were given a HK$250,000 tax break if they trade in a car that is at least six years old. The tax concession would cover the first registration tax of private electric cars valued at HK$377,500 or less.

However, whether the concession will encourage the 400,000 eligible owners to scrap their conventional fuel cars in favor of e-mobility remains to be seen, for two main reasons.

First, the “one-for-one replacement” scheme is far from the full tax waiver which some want reinstated.

In last year’s budget, a previous total tax exemption for electric cars was capped at HK$97,500, and the impact was immediate: only 99 battery-powered private cars were sold in the following nine months, compared with 3,761 in the three months prior to the cap.

Second, while tax changes do appear to have a major effect on electric car purchases, costs alone do not explain everything. For sustainable drives to thrive, it is equally important to build the required infrastructure.

While the number of EV charging points has grown rapidly in the past five years (from 1,036 to 1,774 between 2013 and 2017), it is far from sufficiently attractive for existing and potential EV users.

Not only is there a shortage of charging points, but they are also unevenly distributed across the city. My research finds that nearly 40 percent of quick or semi-quick public EV charging stations are located on Hong Kong Island.

Moreover, of the approximately 130 quick public EV charging stations (a quick charge takes one to two hours, compared with six to seven hours for a standard charge) in the city, close to 40 percent are specifically for Tesla cars, rather than for all EVs.

And while public EV charging facilities are found in government premises, parks or carparks, they are not open 24 hours a day.

The government stand is that public charging facilities are merely supplementary, and private EV owners should perform daily charging of their vehicles at their home, workplace or charging facilities provided by suppliers.

However, some management companies of private buildings or corporations are unwilling to install EV charging facilities in their parking spaces, citing high costs.

EV users are also frustrated by incomplete information on the location and usage rate of EV charging stations.

Although the Environmental Protection Department has released information about the location and number of public EV charging stations, and some charging facility suppliers provide information about the real-time occupancy status of their charging stations through mobile apps, some property management companies are unwilling to disclose such information.

To try and establish how far Hong Kong still has to travel on the road to e-mobility, my team at the Chinese University of Hong Kong (CUHK) recently did a study to compare the development of EVs in Berlin and in Hong Kong.

Although Berlin has a lower population density and fewer EVs than Hong Kong, it has nearly the same number of public EV charging facilities as we do.

Furthermore, EV owners in Berlin are exempt from motor vehicle taxes for 10 years, while new car buyers stand to get a 4,000 euro (US$4,720) subsidy if they buy a purely electric car, and they can also freely transfer their car ownership.

Closer to home, the mainland Chinese government has taken the lead to promote EVs as part of the country’s efforts to cut carbon dioxide emissions, with Beijing turned into a major testing ground.

For instance, some petrol stations in the city now double up as EV charging points, while car owners can more easily obtain a car license plate for an EV than for a conventional car.

Also, the Beijing municipal government offers subsidies to buyers of purely electric cars, with particular EV models also entitled to central government subsidies.

And although central government subsidies fell by 20 percent in the third quarter of last year, subsidies given in 2017 reached 1.6 billion yuan (US$250.14 million).

However, Beijing does suffer from an uneven spread of EV charging points, and there is limited space for charging stations in the city center.

The current official targets are for a total of 10,000 EV charging stations to be installed in Beijing, and for there to be one charging point every five kilometers.

This target informs a spatial planning analysis my team at CUHK did in 2016, which proposes a higher concentration of EV charging stations at the center of Beijing compared with the city’s outer rings, so that areas with high EV demand can be better served within relatively short distances.

Stood against international comparisons, it is clear that Hong Kong lags behind in terms of official EV policy and infrastructure.

In addition to tax concessions, there is a range of incentives the government can provide to promote greater take-up of EVs.

Practically, the government should provide exclusive car parking spaces for EVs, charge them lower tunnel toll rates, and most importantly, improve the public EV charging infrastructure by, in particular, increasing the number of public quick or semi-quick EV charge points.

The government desperately needs a coherent EV strategy if it is serious about promoting e-mobility in its bid to turn Hong Kong into a smart city.

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Assistant Professor, Department of Geography and Resource Management, Faculty of Social Science at The Chinese University of Hong Kong