Photo: Brooke Crothers/Forbes

Singapore will stop registering new fuel-powered cars and taxis starting in 2025, with all newly registered ones being required to run on cleaner energy from 2030, Minister for Transport Ong Ye Kung said on March 4. The road tax on electric cars has now been significantly reduced, which is driving EV sales, especially for Tesla, which has started selling its cars in the city-state at shockingly low prices.

Ong Ye Kung announced further changes to the road tax structure to reduce them for mass-market electric vehicles. The additional minimum registration fee for electric vehicles will also be reduced from S$5,000 to zero. The road tax adjustments would involve merging the current ranges for 30-90kW and 90-230kW electric vehicles and subordinating them to the current road tax formula for the lower range.

Following these adjustments, Hyundai Kona Electric's annual road tax will drop from S$1,400 to S$1,100, and the annual road tax for the Tesla Model 3 will drop from S$2,300 to S$1,500, making EVs comparable to internal combustion engine models.

According to Zafar Momin, adjunct associate professor at Nanyang Technological University's Nanyang Business School, when the first Tesla was imported in 2016, local regulators were in a quandary about how to assess it. After some debate, the owner was taxed S$15,000 for the carbon emissions generated during battery charging.

“Penalizing an EV, instead of providing incentives like the rest of the world, was contrary to Singapore’s aspiration to be a smart and green nation,” Zafar said. “This incident may have led Musk to form the view that he tweeted.” Tesla CEO Elon Musk chided the city-state several times on Twitter for not supporting the introduction of electric vehicles in Singapore.

In parallel with the reduction in road tax, the government will increase the number of installed charging points for electric vehicles. According to the announced plan, 60,000 charging points will be installed in public car parks and private premises by 2030, up from the previous target of 28,000.

According to BloombergNEF, such moves could help increase electric vehicle sales to about 4% of total passenger car sales in Singapore by 2023, or about 3,300 units. By comparison, 1,396 electric vehicles were registered in the city-state last year, according to the Land Transportation Authority.

“The government’s efforts to ensure availability of chargers at public parking lots and at public-housing car parks will help improve consumer acceptance of EVs,” BNEF analyst Allen Tom Abraham said.

Tesla, as the leader in the world of electric vehicles, is now vying to capture a big market share in Singapore. Concurrently with the change in city-state policy, Tesla began re-entering the Singapore market. In early February 2021, the company launched an online order configurator with shockingly affordable prices.

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