Tax tweaks alone won't boost use of electric cars in HK

January 30, 2019 18:58
The lack of charging stations is the main reason why electric vehicles are not so popular in Hong Kong. Photo: HKEJ

Several years ago, the SAR government introduced tax concessions to encourage more motorists to switch to electric vehicles (EVs) as part of efforts to reduce roadside carbon emissions in our city, only to suddenly cut the first registration tax concessions for EV last year in order to curb the increase in the number of private vehicles.

As a result, the number of newly registered EVs in Hong Kong plummeted.

Financial Secretary Paul Chan Mo-po is apparently aware of the trend, and in order to stem it, he said he is planning to relax the requirements for an initiative known as the “One-for-One Replacement” Scheme, which will last until March 31, 2021.

The Environmental Bureau on Monday announced that the revised eligibility criteria under the scheme would come into effect immediately.

Under the new eligibility criteria, applicants must be the registered owner of an old car for 18 months or more – instead of three years or more – without interruption immediately prior to its de-registration.

Also, an old car only needs to have been licensed for at least 10 months within 12 months before its de-registration. The original rule required at least 20 months within 24 months before its de-registration.

The tax concessions offered under the scheme remain unchanged, with the upper limit still at HK$250,000.

Despite the relaxed criteria, our policies on electric cars remain at such a low level that they simply can’t compare to those of advanced European countries or even those of the mainland.

One striking example: whereas Shenzhen taxi drivers have all switched to EVs in recent years, the only remaining electric taxi in our city, manufactured by BYD, was sold for scrap in October last year.

In fact, the main reason why electric cars, whether for taxi service or private use, are not so popular here is the severe shortage of charging stations for EVs in the city.

At present, there are only about 2,000 charging stations across Hong Kong for public use.

Only around 20 percent of them are quick charging stations, while the remaining 80 percent are either medium- or low-speed charging points, which often take motorists and taxi drivers up to several hours to recharge the batteries of their vehicles.

Unfortunately, our government has been very slow in addressing this issue.

When asked in December by lawmakers at the Legislative Council whether the administration plans to increase the number of public charging stations for EVs in the city, Secretary for the Environment Wong Kam-sing said public charging stations are intended for emergency purposes only rather than main charging terminals for electric car users.

Given the government's attitude about the need for more charging stations in the city, one cannot be optimistic about the impact of the relaxation of the eligibility criteria under the One-for-One Replacement Scheme.

In Norway, where electric vehicles account for around 40 percent of all cars on the road, and make up 30 percent of the total sales of new automobiles last year, free public charging stations are everywhere across the country.

Furthermore, all EV owners in Norway are entitled to import tax exemptions and free parking across the nation.

The Norwegian government's target is that all new vehicles sold in the country will be EVs before 2025. 

No wonder Norway is a world leader in promoting green economy.

We understand that we can't expect the Hong Kong government to do everything that the Norwegian authorities are doing, but we believe our officials in charge of transport and environmental affairs should at least be more proactive and aggressive in promoting the use of electric cars.

But once again, our government has let us down in this regard.

During a Legco meeting on Monday, Wong was asked how the government intends to achieve the target of increasing the proportion of EVs on the road to 30 percent by 2020, Wong clarified that it was actually a projected, ideal vision rather than a government goal.

In other words, our government simply lacks both the resolve and a clear goal in promoting the use of EVs.

Unless the government puts in place a comprehensive set of supportive measures, we believe the tiny tax tweaks devised by Chan and Wong are unlikely to make any difference when it comes to encouraging more car owners to switch to EVs.

This article appeared in the Hong Kong Economic Journal on Jan 29

Translation by Alan Lee

[Chinese version 中文版]

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Hong Kong Economic Journal