Electric car rebates - Tax incentives to boost ownership

Sustainability. Electromobility. Connectivity. Innovation. These are all pressing buzzwords in the automotive industry that converge together in one specific manner - electric vehicles (EVs).

As part of Budget 2020, the Government has announced a slew of measures to encourage and incentivise EV ownership. This is in a bid to transition away from internal combustion engine (ICE) vehicles, with the vision being the ability to phase out ICE vehicles within the next 20 years.

While its still unlikely that ICE cars will completely go away in 2040, these measures will facilitate the adoption of vehicles that run on cleaner energy - important for both health and climate change reasons.

So, what does this mean for you as a potential electric car buyer in Singapore? Or, what if you already own an electric car? Here, we break down what these new tax incentives mean, and how they impact you as an EV owner. 

Information correct as of 12 May 2020. Information only applicable to electric passenger cars, and do not cover the specifics with regards to commercial vehicles and electric motorcycles. 

Early adoption incentive

To address the issue of the higher initial cost of EVs, LTA is rolling out an EV Early Adoption Incentive (EEAI) that will be effective from 1 January 2021 to 31 December 2023.

The EEAI offers a 45% rebate on the Additional Registration Fee (ARF), capped at $20,000 per vehicle. This is estimated to lower the upfront cost of an electric car by an average of 11%.

This scheme will apply to individual and fleet vehicle owners, such as taxi and car rental companies. 

Revised road tax structure

The tax structure for EVs have been revised, with the five power rating categories adjusted to better reflect the current realities of EV power output. The power rating is determined as the power output of the car's electric motor as indicated by the manufacturer, calculated in kW. 

Power Rating (PR) in kW	Current 6-Monthly Road Tax Formula until 31 Dec 2020
PR≤7.5	$200 x 0.782
7.5<PR≤32.5	[$200 + $2(PR - 7.5)] x 0.782
32.5<PR≤70	[$250 + $6(PR - 32.5)] x 0.782
70<PR≤157.5	[$475 + $12(PR - 70)] x 0.782
PR>157.5	[$1,525 + $16(PR - 157.5)] x 0.782

Power Rating (PR) in kW	New 6-Monthly Road Tax Formula from 1 Jan 2021
PR≤7.5	$200 x 0.782
7.5<PR≤30	[$200 + $2(PR - 7.5)] x 0.782
30<PR≤90	[$250 + $3.75(PR - 30)] x 0.782
90<PR≤230	[$475 + $7.50(PR - 90)] x 0.782
PR>230	[$1,525 + $10(PR - 230)] x 0.782

There will be an additional $700/year flat component fee for fully electric cars, which is sized to partially recover for the fuel excise duties paid by equivalent ICE cars. This will be phased in over the next three years - $200 in 2021, $400 in 2022 and $700 from 2023 onwards.

Under the revised road tax framework, mass market electric cars will incur an annual usage cost that is still about 9% lower than their ICE equivalents.

For petrol-electric hybrids, this new tax structure, with the adjusted variable component, will also be used. However, hybrids will not incur the additional $700/year flat component for now, as these vehicles are still largely petrol-fuelled. It is estimated that this revision will reduce road tax for hybrids by an average of 29%.

Vehicular Emissions Scheme

The existing Vehicular Emissions Scheme (VES), effective from 1 July 2018 to 31 December 2020, takes into account CO₂ emissions as well as four other pollutants. The worst performing pollutant determines the vehicle's banding, and thus the corresponding VES rebate or surcharge.

However, for electric or plug-in hybrid cars, LTA calculates the car's carbon emission using an emission factor of 0.4g CO₂/Wh applied to its electricity energy consumption. Most electric cars in Singapore will fall under the A1 banding (getting a $20,000 rebate), while higher performance models like the Jaguar I-PACE fall into the A2 band ($10,000 rebate).

The VES system will be reviewed for 2021, and it's likely that changes will be made to account for EVs in a less arbitrary manner. 

Existing EV owners

For existing EV owners, or those who register electric cars before 1 January 2021, special transitional arrangements have been offered. The road tax for these cars will also be calculated using the new variable component from 1 January 2021 onwards, and will lead to an across-the-board reduction in road tax.

Additionally, existing EV owners will enjoy a waiver of the additional flat component fee for the three-year period from 1 January 2021 to 31 December 2023. The full $700/year payment will only be applicable from 1 January 2024. 

Increased charging infrastructure

Singapore will expand the EV charging infrastructure significantly, with the objective of having a total of 28,000 charging points by 2030.

In March, the LTA and the Energy Market Authority also announced the addition of Japanese fast-charging method CHAdeMO as an optional public charging standard for electric vehicles. A CHAdeMO DC charger with a power rating of 120kW can fully charged an electric car such as the Nissan Leaf in about 30 minutes.

Here are some additional resources about electric cars that may interest you

6 of the best electric & hybrid certified workshops in Singapore

7 reasons why your next car should be an electric car

Should you buy an electric car in Singapore right now?