SINGAPORE - Some 51.9 per cent of new vans registered in Singapore in the first three months of 2023 were electric vehicles (EVs).

This is the first time that EV registration outnumbered registration of vehicles with internal combustion engines for a given vehicle type. Just 20.1 per cent of vans registered in the same period in 2022 were EVs.

In absolute terms, the number of registered electric light goods vehicles (LGVs) was 938, up from 206 units in the first quarter of 2022.

The surge was likely driven by the rush to take advantage of the higher tax incentive for such vehicles before the rebate amount was halved from $30,000 after March 31.

Supercharged by the race to register electric LGVs before the deadline, the price of certificates of entitlement (COEs) for commercial vehicles – already in very short supply during this period – rose rapidly in the first three months of 2023, peaking at $91,101 at the first tender in March. Such COEs cost $48,889 exactly a year ago.

The number of commercial vehicle COEs available for tender in the first three months of 2023 was significantly smaller than in the same period in 2022.

A total of 360 commercial vehicle COEs were available for bidding from January to March – 29.7 per cent lower than the 512 available COEs of the same type for the same period in 2022.

Secured COEs for commercial vehicles can be held for three months before they have to be used to register a vehicle. This partially accounts for why there can be more registrations than the COE quota for the given period, as dealers may be using a COE secured earlier to register a vehicle in the current period.

The other reason registrations can outnumber the available quota is the Early Turnover Scheme (ETS), which is unique to commercial vehicles.

Under ETS, the owner pays a discounted rate of the COE price in exchange for deregistering an existing commercial vehicle before its COE expires, to get a new one on the road.

The actual amount payable depends on the specific vehicle being given up, which takes into account considerations like the number of years remaining on its COE and the age of the vehicle itself.

In 2021 and 2022, more commercial vehicles were registered under ETS than by using new COEs.

Between January and March, 2,512 commercial vehicles – not only LGVs, but also larger trucks and buses – were registered using ETS, compared with just 408 units that used new COEs.

For the whole of 2022, ETS accounted for 7,477 registrations, while only 2,101 used a fresh COE.

While ETS was meant to incentivise owners of older trucks and buses to renew their fleet, the scheme has given rise to a separate type of business where dealers source for older vehicles for their ETS incentive.

As commercial vehicle COEs are in short supply, these “ETS papers” are hotly traded at prices that are very close to or even at the prevailing COE price, profiting the dealers.

From April 1, the incentives under the Commercial Vehicle Emissions Scheme (CVES) were revised. For electric LGVs, the rebate amount is now $15,000, down from the previous $30,000.

This prompted electric LGV sellers to get their registrations done before the end of March.

March data showed that 610 electric LGVs were registered, accounting for 65 per cent of the total number of electric LGVs posted in the first three months of the year.

Another factor that contributed to the overall spike in electric LGV registration – as well as elevated registration of commercial vehicles in general – in the first quarter of the year was the change in requirements for vehicle emissions and consumption test results that also took effect in April.

Dealers have to apply for approval with new test results before the vehicle can be sold after the switchover. This can be an arduous process that takes time and incurs additional costs.

Hence, some dealers were already opting to register their existing stock of commercial vehicles before April, even without ready buyers for them.

This goes towards explaining the high COE price for commercial vehicles, which hit a record $91,101 in the first tender exercise in March. For reference, such COEs cost $48,889 exactly a year ago.

As at March 31, the total number of EVs, which include cars, taxis, motorcycles and commercial vehicles, numbered 10,869 units, representing 1.12 per cent of the total population of 970,114 vehicles. Among them were 2,830 electric commercial vehicles.

Without the pressure to qualify for higher tax incentives, it remains to be seen if the adoption of electric vans in Singapore will continue at this rate.

If the development in COE premium reflects market demand, commercial COE prices have dipped from the peak of $91,101 in March to $75,344 at the first tender exercise in April, suggesting that things may be cooling off slightly, if only in the immediate term.