Commentary: Even car makers think buying an electric vehicle is starting to look like a good idea

Commentary: Even car makers think buying an electric vehicle is starting to look like a good idea

4/12/2021 1:03:00 AM

Commentary: Even car makers think buying an electric vehicle is starting to look like a good idea

Tesla’s recent US$1 trillion market capitalisation is a sign of broader shifting sands in the electric vehicle market, says NTU’s Clive Choo.

THE GREEN PUSH FOR EVSComing on the end of the biggest global climate conference COP26 in Glasgow, the push for EVs is also in sync with larger, undisputable forces pushing for decarbonisation for the long term.Singapore is one of the 30 or more countries to support the Paris Agreement, with EVs playing a big part in

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Singapore’s Green Plan.Land transport makes up over a tenth of Singapore’s total emissions today and phasing out ICE vehicles by 2040 is a key goal.Having a robust charging infrastructure are critical to realising these ambitions.The Netherlands, with its long traditional of environmentalism, high petrol prices and tax breaks, had a headstart and today is upheld as a EV success story, with one of the highest proportions of electric cars on the road at 170,000 units, and one in five of new cars sold annually being an EV.

This is matched by the country’s 75,000 charging stations - one-third of the total EU’s charging stations – with 190,000 households have their own charging ports.Others are following the Dutch play. In view of becoming a climate-neutral continent by 2050, the European Commission expects at least 30 million EVs on the road by the end of this decade. A 2020 stimulus package aims to develop 1 million charging stations for EVs and hydrogen-powered cars by 2025.

That same story is finding traction in the US, after the passage of a contentious Infrastructure Bill that allocates US$7.5 billion for a nationwide network of EV charging stations. Billions of capital investment have also been parked aside by players like Volkswagen and construction engineering Black & Veatch to turbocharge this effort.

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Author's table showing costs of buying an electric vehicle versus a internal combustion vehicle. (Sources: OneMotoring, SG Car Mart)COSTS OF EV OWNERSHIP IS UNCERTAINTYClimate action aside, car owners should already be seriously considering buying a EV when their Certificate of Entitlement (COE) runs out.

Even today, the ownership economics of EV and ICE cars will reach parity over time. Though the retailing price of an EV is greater than an ICE car, they pay off with lower running costs of ICE cars.With the Vehicular Emissions Scheme, coupled with the Electric Vehicle Early Adoption Incentive, buyers can enjoy maximum combined cost savings of up to S$45,000 today if they purchase a new, fully electric car.

Singapore can continue to let consumer EV adoption find its footing.With an estimated 60,000 charging points in Singapore by 2030 based on the assumption that one-third of the cars in Singapore will be EVs, Singapore will not suffer the common pain point of insufficient charging points found in other parts of the world.

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But if it wants to increase the EV population, a combination of incentives such as the lowering of road tax, import duty for EV and tweaks to the COE system will be needed to nudge car drivers.Singapore also needs to consider how the restructuring of the matured ICE industry can be accelerated.

About 4,000 small- and medium-sized enterprises in the motor car industry including businesses involved in car insurance, sales and distribution, maintenance and servicing workshops, spare parts and petrol kiosks will be affected if the demand for ICE vehicles is reduced significantly.

Tesla’s stock price surge may be a bubble. A few days after Hertz’s announcement, Elon Musk clarified the deal was not yet finalised. But it doesn’t negate the shifting sands underway in the car industry that’s making the electric vehicle a clearer choice for consumers.

If plans to ramp up charging points remain on track and assuming carmakers can get manufacturing costs down further, the promise of more EVs and a cleaner environment can be expected.Dr Clive Choo is a Senior Lecturer in Strategy with Nanyang Business School, NTU.

Read more: CNA »

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