Opinion: Why the Electric Car Revolution Will Not Be Smooth Sailing

There has been plenty of chatter in the last 3 months surrounding Singapore’s push towards the adoption of electric vehicles in the near future. Backed by plenty of news coverage, the man of the street displayed renewed enthusiasm in touting that the electric revolution is near. You would not doubt his enthusiasm - after all, the country’s “blueprint” for electrification has already been made public, charting out key milestones relating to the imminent draw down of diesel powered vehicles, the target number of charging stations in Singapore, as well as our ultimate 2040 goal of completely phasing out internal combustion engine (ICE) vehicles. Though encouraging, this declaration of intent feels a little overdue for a supposed first world city state, and I am of the unpopular opinion that this electric revolution will take on water mid-journey, and the journey will be anything but a smooth one. In short - I have my doubts over whether Singapore will ever phase out ICE vehicles in favour of electric vehicles. Even if it does manage to do it, I am almost certain that the process will not be so cut and dry.

The electric car revolution is not going to be Singapore’s first opportunity to support this global idea of environmentally friendly transportation. In the past, they have had the chance to support CNG technology in cars, but ultimately failed in providing necessary administration support for the roll out of CNG stations across the country. Consumer incentivisation was also lacklustre, with little education surrounding the introduction of the Vehicle Emissions Scheme (VES). At its worst, there were even speculations that Singapore’s reluctance to support the CNG agenda was somehow pegged to priorities in supporting the oil refinery infrastructure right here in Singapore. Whether it is true or not remains a mystery, and I shan’t weigh in on that matter. The bottom line is, Singapore has never taken up a convincing position to be a thought or action leader in areas related to environmental conservation. Publicly, our stance usually checks all the right boxes and we’re usually participative in the right dialogues with the right people - but interestingly, I can’t say we’ve ever backed up our first world position with a very robust environmental action plan. Overall, one gets the distinct impression that this position is a very calculated one - One that looks and sounds right, but feels unnervingly hollow. However, the flip side considers that just like with CNG, which never really took off globally, there is perhaps some hidden wisdom in Singapore’s reluctance to dive wholeheartedly into the electric revolution. For better or for worse, the goal of 2040 seems like more of a guideline than a mandate at the moment, which isn’t very confidence inducing for upcoming car buyers who are trying to gauge their own positions on the matter.

In Singapore, a car is a sizable investment that constitutes some financial planning. Here, a poorly made car buying decision can derail other major aspects of life, including family planning and housing decisions. If the overall direction and objectives of the government are uncertain, it can make consumers (myself included) a little bit nervy about jumping onto the EV bandwagon. It seems pertinent to note that in our blueprint, the adoption of EVs will be incentivised, but not mandated, with much of the onus of going electric still contingent on the consumer’s receptiveness to the proposed incentives. If history has taught us anything, it is that if something matters enough, it will be mandated. We have banned chewing gum and dialect in the past - surely we could mandate the adoption of EVs if we so deem it necessary. Are we then to assume that perhaps this environmental agenda was never really at the top of our government’s priority list anyway? I leave you to decide for yourselves how much that possibility bothers you. If the goal of clean transportation in 2040 remains a vision, and not a mandate, then it may be suggestive that the goal posts can and perhapp will be moved somewhere in the future.

To incentivise the adoption of this 2040 vision, Singapore will roll out a series of purchase incentives for the early adoption of low emission vehicles. The most apparent of these incentives include a cash rebate off the additional registration fee (ARF) of the vehicle, depending on which emissions band the vehicle sits in. The cleaner the vehicle, the higher the incentive. The previous ARF floor of $5,000 will also be removed, which means that vehicles can actually be rated with a $0 ARF value. Factually, this reduces the upfront costs of putting low emission vehicles like electric cars on Singapore’s roads, and is a good thing in that one-faceted point of consideration. Scratch the surface however, and you’ll find that there are actually fairly major pitfalls that can catch the uninitiated purchasers off guard. Because we have a 10 year certificate of entitlement structure in Singapore, new and used car values are usually pegged to an annual depreciation rate, which provides a sort of framework for cars to be valued across the board. In this system, used cars typically depreciate less annually than their brand new counterparts. With a $0 ARF, this skews the depreciation of an electric vehicle drastically, making it hard to peg against ICE vehicles, and could give the illusion of an artificially low depreciation rate for brand new EVs or skew the resale value of the car to the extent that the first owner is slapped with unforeseen losses on the EV they are trying to sell. Either way, there is a very real possibility that consumers may unwittingly entrap themselves with an EV purchase they think they can afford, only to lose large amounts of money mid-cycle when they try to sell. Either way, there is a sense that this pro-choice stance of incentivisation will likely not yield the “intended” results. Savvy car buyers will stay clear of an EV with a $0 ARF, and less savvy buyers will be stuck with their purchase because they can’t afford to sell the car. When this happens, the blame and accountability of non-adoption will fall on you and me. Our policy makers on the other hand, would have “tried their best” to make all this work. The illusion of choice is in the fact that a terrible option isn’t really an option at all in this situation. Unless something develops here, I’ll be sticking to petrol power.

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