Why did the Cat A COE premium exceed Cat B’s in the latest tender?

SINGAPORE – In a departure from the norm in recent years, the price of a Category A certificate of entitlement (COE) ended higher than that of a Category B certificate at

the latest tender exercise on Feb 20

.

The premium for COEs used to register smaller, less powerful cars and electric vehicles (Category A) ended at $106,501, higher than the $105,001 price tag for a Category B certificate for bigger, more powerful cars.

A COE is needed to register a car in Singapore, and given that the cost of acquiring a certificate is usually part of the car price, the latest tender results mean that some mass-market cars will have a higher price tag than some supposedly premium models.

What led to Feb 20 COE results?

Developments in electric vehicle (EV) technology and the effectiveness of Singapore’s measures to encourage consumers to switch away from non-electric cars have driven up the price of Category A COEs over that of Category B.

The rationale is that, with Category A certificates generally costing less than for Category B, EVs are a more affordable buy in the category for smaller, less powerful cars.

Many EV makers have been able to introduce more models that comply with the Category A COE requirement of having no more than 110kW of power.

The popularity of these lower-powered EVs has been one of the main drivers of rising Category A premiums.

Buyers who otherwise would consider a Category B internal combustion engine car or hybrid find themselves drawn to the less powerful EVs, which boast better technology and comparable driving performance while incurring lower road tax than more powerful Category B EV models.

The

revision to the maximum power output threshold

for an EV to qualify for a Category A COE in May 2022, from 97kW to 110kW, allowed more models to come under this category.

Since the revision, not only were more new EVs with up to 110kW of power launched in Singapore, but existing EV models that were available at the Category B level of power were reintroduced with their power output tuned down to slip into Category A.

Among them was

the BYD Atto 3

, a popular compact electric sport utility vehicle (SUV), with power turned down from 150kW to 100kW.

The lower-powered version has sold well enough for BYD to stop selling the Category B COE version in Singapore.

Larger, more upmarket EVs have also taken this route.

American EV maker Tesla also launched a Category A-compliant version of its mid-size SUV,

the Model Y

, with just 110kW in March 2025. This complements the 255kW, Category B COE version.

Associate Professor Walter Theseira, a transport economist at the Singapore University of Social Sciences, said the tuned-down EVs are often as well equipped as the more powerful, Category B COE versions, so buyers do not feel penalised for opting for the less expensive version, while incurring lower running costs.

As the annual road tax for EVs is based on their motor power, less powerful Category A EVs also cost less to own.

On the whole, the gap between the price of Category A and Category B certificates has been narrowing – with Category A prices rising more strongly in recent years than Category B – until the former overtook the latter in the most recent tender exercise.

When did it happen in the past?

Before the latest exercise, the last time that the Category A COE premium was higher than Category B’s was just before COE tender exercises were suspended between April 2020 and June 2020 because of the Covid-19 pandemic.

At the second tender exercise of March 2020, a Category A COE cost $31,210, which was $1,198 more than Category B’s $30,012. This reflected relatively weaker buying interest in larger cars during that time.

In 2018, there were seven COE exercises between March and July when the Category A premium exceeded Category B’s.

During that period, news reports cited the oversupply of private-hire vehicles, which led fleet operators to hold back from registering cars, as the reason for the prices.

There were also three tender exercises in 2016 where Category A COEs cost more than Category B. Industry insiders attributed this to the easing of vehicle financing rules and new entrants to the market.

These factors also came into play at the first tender exercise in February 2017.

What does this mean for car buyers?

Following the latest COE results, some Category A EV models, like the MG S5, kept prices unchanged.

Some Category B EVs, however, dropped their prices, like the BYD Sealion 7 Premium, which went from $213,388 to $199,888.

The decrease in the price was more than the drop in the COE premium.

If COE prices continue on this trajectory, some consumers may be attracted to switch to Category B EV models, even though they incur higher road tax.

Is this likely to continue?

Yes, as more buyers gravitate from Category B models to Category A ones despite the higher premium.

The drastic

reduction in Preferential Additional Registration Fee (PARF) rebate

for deregistering cars, which applies to cars registered with COEs from the second tender exercise in February, has significantly altered the calculation behind car ownership.

The effect of the measure on buying interest is expected to be more keenly felt in the coming months.

PARF is the residual value of the upfront tax paid when a car is deregistered by its 10th year.

Basically, newly registered cars under the revised scheme are worth a lot less over their lifespan.

For example, the rebate for a Toyota Harrier, which is a Category B mid-size hybrid SUV, drops from $26,003 to just $2,600 when it is deregistered in its 10th year.

The higher cost of owning such a car could nudge the buyer towards a comparable EV, like a Category A-compliant BYD Sealion 7. The EV receives $30,000 in tax rebates, which the hybrid does not, resulting in the BYD costing $199,888 with COE, while the Toyota is priced at $264,888 with COE.

As the switch in demand for Category B COE cars to Category A continues, industry insiders like Mr Vincent Ng, an automotive industry consultant with motor distributor Vincar, believes that the Category A COE price will continue to overtake, or at least stay very close to, Category B COE’s price in the next few months.

Demand for Category B certificates will come more from fleet buyers for non-EVs than individuals for now, said Mr Ng, because these companies are able to find hirers for such models.

Stoking demand for Category A COEs is the concerted effort by EV makers, especially the Chinese brands, to gain market share. Other than a constant stream of new model introductions, these brands are also known to run aggressive promotions to close more deals.

As 2026 progresses, it is likely that EV sellers will remind customers that a part of the rebates – known as the EV Early Adoption Incentive – valued at $7,500,

will be expiring by the end of 2026

, to urge buyers to commit sooner to avoid missing out.

This fear of missing out on an expiring scheme was among the drivers behind the Category A COE price

hitting its record of $128,105

at the first tender in October 2025, after it was announced that the revised Vehicular Emission Scheme will increase the cost of some cars by $7,500 from January 1, 2026.