Singapore Gives Incentives for Eco-Friendly Cars

Singapore Gives Incentives for Eco-Friendly Cars

by -

Singaporeans who buy eco-friendly cars using hybrid or electric powerplants will get special incentives between January 2nd 2001 and December 31st 2003. In an official statement, the government says it is giving rebates for an initial 3-year period (with a review after that) to help lower the cost differential between electric and hybrid cars, and conventional cars. This is because electric and hybrid cars cause less pollution than conventional petrol-powered cars, but cost significantly more. The rebates are aimed at encouraging motorists to consider buying electric and hybrid cars instead of conventional cars.

The rebates will be in the form of a 20% reduction in the open-market values that form the basis for the value of the Certificate of Entitlement (CoE) which every new car buyer must obtain in order to buy a car in the island republic. The CoE can amount to as much (or more) as the cost of the car but is deemed necessary as a means to control the vehicle population on the island.

In classifying electric cars for the COE categories (there are different categories based on engine size), those with power outputs of up to 57.5 kW are considered as equivalent to 1.6-litre petrol-engined cars while those with motors generating more than 57.5 kW will be classified as being above equivalent 1.6-litre petrol-engined cars. Hybrid-engined cars will be classified according to their engine size or power output, whichever is higher.

Cars with electric motors only will be subject to a 20% reduction in annual roadtax according to their power output while those with hybrid units – an electric motor coupled to a small petrol engine – will have 10% reduction. The roadtax calculations will be based on either the power output or the engine size, whichever is the higher amount.

The licensing authority has formulated a correlation table which was established by examining the relationship between the engine capacity and the maximum power ratings of existing conventional cars; and equating the engine capacities of conventional cars with the maximum motor power ratings of electric cars taking into consideration the differences in engine and motor power output characteristics and transmission efficiency.

Like conventional vehicles, this special class of vehicles will also be required to have compulsory inspections at the same intervals. In Singapore, the inspections are not required for the first three years after registration of a new vehicle; every two years for vehicles between 3 and 10 years old, and every year for vehicles older than 10 years. Depending on the sophistication of the built-in safety features of the electric/hybrid cars, there may also be a requirement for other safety checks by the manufacturers’ agents as part of the compulsory periodic inspection.

A few companies already have hybrid-engined models in production, the most widely sold (50,000 units worldwide to date) being the Toyota Prius which was introduced in Japan in early 1998 and is now also on sale in the USA. Honda also produces a sleek hybrid-engined car known as the Insight which is claimed to be more economical than the Prius due to its light aluminium bodyshell.

About two years ago, Toyota had brought the Prius around the region for demonstrations to the respective governments and to lobby for special incentives for the car in view of its very low emission levels and high fuel efficiency. The approach was taken because most ASEAN countries have prohibitive import taxes (particularly in Malaysia) on cars and if the Prius, which is made in Japan, were to be sold, it would cost more than a Toyota Camry.

As such, Toyota felt that it would be pointless introducing the model if it cost so much because it would then become a novelty for the rich, rather than an affordable widely-adopted solution to reducing pollution and depletion of energy resources. It is Toyota’s aim to get its hybrid system popularised globally and the way to do that is to ensure that the Prius has an affordable pricetag.

When the Prius was launched in Japan, it was rumoured that the car’s production cost was high and that Toyota was subsidising its cost to achieve a reasonable price. It was believed that that the Prius cost Toyota 5 million yen to make but the market price was 2.15 million.

Kazuo Okamoto, the director involved in the 6-year project, denied that the Prius was being sold at a loss. “No matter what our financial strength is, it would not be a good business practice to lose that much money on each car, especially since we are planning to sell 12 thousand annually!” he said.

“Yes, technology and R&D costs were very high, but that’s normal in the initial stage of such an advanced new model. As volumes rise, the real costs would fall rapidly,” he added. But he did also suggest that Toyota was ‘breaking even’ [at that time]. Last year, another Toyota executive commented that rapidly rising volumes have given the company the required economies of scale and that the cost of producing the Prius has ‘come down quickly’.

Besides Toyota and Honda, Ford and Peugeot also have electrically-powered vehicles and it is likely that these manufacturers will be quick to introduce their products in Singapore. However, for some of the 100% electrically-powered cars, the issue of recharging stations needs to be addressed as they cannot be charged using ordinary household power points. This will mean that recharging stations will need to be established around the island which is, fortunately, not a large area to cover.

For hybrid cars, however, recharging is not an issue because the batteries are recharged as the car runs and recharging is only necessary if for some reason the batteries go completely flat. But in an emergency, the petrol engine can still be used to provide power.

So far, the Malaysian government has not announced any incentives for such eco-friendly cars and it seems unlikely that the matter would receive a high priority unless Proton or Perodua begin developing such systems. Some years ago, Proton had commissioned an American company to develop an electrically-powered Wira but the project was terminated because the company went bankrupt. It is not out of the question for Perodua to embark on such a program, though, as its technical partner, Daihatsu, has done a lot of work on electric vehicles and besides, it is a part of the Toyota Group too.

Related stories:
What’s it like driving a Prius?

The Toyota Hybrid System


Leave a Reply