Forum: Current road tax regime penalises electric vehicles

Vehicles on the PIE near Bedok, on March 15, 2019.
Vehicles on the PIE near Bedok, on March 15, 2019.PHOTO: ST FILE

Despite their growing popularity worldwide, electric vehicles (EVs) continue to face obstacles gaining traction here. One obstacle that is less spoken of is the annual road tax.

Singapore's current road tax regime makes EVs more expensive to own compared with a petrol car of similar size and performance. This pushes car buyers towards petrol cars instead of EVs.

Yet EVs are far more efficient than petrol cars, being more environmentally friendly and coming with less than half of the fuel/charging costs.

Take last year's Straits Times Car of the Year, the Jaguar I-Pace. This is considered a premium electric sport utility vehicle (SUV), and will incur a road tax of $5,800 a year based on its 294kW power rating - the same as that of a 5.5-litre petrol car. A competing premium petrol SUV with a 2-litre engine will have a road tax of just $1,202 a year.

Taking the example of a more affordable mid-range EV, the Hyundai Kona EV with 150kW incurs a road tax of $2,244 a year. That same car model with a 1.6-litre petrol engine will have road tax of only $743 a year.

Leading EV-maker Tesla would be subject to a tax of about $4,000 a year for its Model 3 if it were available here.

The road tax was last updated in 2008, before any EVs hit the roads here, when there were only hybrids with weak motors.

The Ministry of Finance said in Parliament in September 2009 that road taxes "are higher for bigger cars, which tend to consume more fuel and produce more emissions than small cars", indicating that bigger and more polluting cars incur higher road tax.

Today, modern EVs have more powerful electric motors even in smaller cars, and emit less than half the amount of carbon dioxide compared with a petrol car, taking into consideration Singapore's natural gas-powered electric grid. Technically, there is little correlation between an EV's power output and its efficiency.

The road tax formula has, therefore, turned somewhat dysfunctional by essentially penalising EVs.

A suggestion is to update the road tax and base it on the vehicle's efficiency or carbon dioxide emission ratings, instead of power rating or engine size. This will price in the environmental impact of vehicles, and encourage the take-up of EVs.

Tobias Eriksson

Today, modern electric vehicles have more powerful electric motors even in smaller cars, and emit less than half the amount of carbon dioxide compared with a petrol car, taking into consideration Singapore's natural gas-powered electric grid. Technically, there is little correlation between an electric vehicle's power output and its efficiency.

A version of this article appeared in the print edition of The Straits Times on January 20, 2020, with the headline 'Current road tax regime penalises electric vehicles'. Print Edition | Subscribe