Green vehicle perks: restrict them to public transport players

ONE of the first things people learn about Tesla is that its cars accelerate faster than a Lamborghini.

The reason is because Elon Musk never stops talking about it.

Last month, during Tesla's Q4 2020 earnings call, Mr Musk had this to say about the new Tesla Model S Plaid, which was expected to commence deliveries this month: "This Model S Plaid will be the first production car ever that is able to go zero to 60 miles an hour in under two seconds."

"No production car ever has been able to get below two seconds, zero to 60," he added.

For many buyers of Tesla cars, the fact that electric vehicles are less polluting than cars with traditional internal combustion engines is just icing on the cake. The real point of these cars is that they are very fast.

It isn't just Tesla cars that are fast though. Electric vehicles, by their nature, accelerate very quickly. Tesla just made that a key part of its marketing.

In effect, Tesla has done for clean-energy vehicles what Apple's iPhone did for mobile communications. Electric vehicles are now cool. And, Tesla is the coolest of them all.

So, if the Lamborghini-like thrill of driving these cars is really what Tesla is selling, perhaps its vehicles should be taxed to the point that they are priced like exotic Italian sports cars.

Furthermore, should the government provide subsidies to Tesla, or any other maker of electric vehicles (EVs), to set up their battery charging infrastructure if the charging points are on private property?

Taxpayers should not have to subsidise those who can own or drive cars like a Tesla.

Larger goals

To be sure, the world is moving on from the era of petrol and diesel engines. And Singapore should move with the times.

There are also benefits to be accrued to Singapore as a whole from encouraging electric vehicle take-up rates.

Yet, Singapore does have a long-standing goal to reduce the number of vehicles on the road, and provide more efficient and accessible public transport.

Singapore is working towards having eight in 10 households located within a 10-minute walk from an MRT station by 2030. Some S$60 billion will be spent in the current decade to expand and renew the rail network.

Through the certificate-of-entitlement system, car ownership is already being curtailed.

The big question is how to convert vehicles that remain on the road to clean-energy ones.

On Tuesday, Finance Minister Heng Swee Keat said in his Budget speech that he would set aside S$30 million over the next five years for EV-related initiatives, such as measures to improve charging provision at private premises.

Calling electric vehicles the most promising clean-energy vehicle technology today, he said the government is aiming to deploy 60,000 charging points at public car parks and private premises by 2030 - up from its previous target of 28,000.

Mr Heng also said the floor for Additional Registration Fee for electric cars would be cut to zero from January 2022 to December 2023.

In addition, he pledged to revise the road tax treatment for electric cars such that a mass-market electric car will have road tax comparable to an internal combustion engine equivalent.

On top of that, the Finance Minister also unveiled a hike in petrol duties. For premium petrol, the duty will be raised by 15 cents per litre. Intermediate petrol will see a hike of 10 cents per litre.

Subsidise ComfortDelGro

Making the charging stations more accessible would go a long way in boosting private demand for electric vehicles. But who would ultimately benefit from this infrastructure?

Car owners are a relatively wealthy minority in Singapore, though many of them will gripe about it being an unavoidable expense.

Makers of electric vehicles and operators of charging stations are commercial enterprises, with a possibly long runway of growth ahead of them.

And, charging stations would arguably enhance the value of the surrounding real estate.

In short, this may be a negotiation that is probably best left to aspiring owners of electric vehicles, private property owners, and the makers of the electric vehicles. They all have a lot to gain from a proliferation of charging stations.

Rather than offer them subsidies, one option should perhaps be to keep raising taxes on fossil fuels and vehicles powered by internal combustion engines to push them in the right direction.

On the other hand, a significant amount of social returns could be generated if the government directed its subsidies to public transport operators such as ComfortDelGro Corp in exchange for a commitment to accelerate investment in clean-energy vehicles.

As it is, close to 60 per cent of the company's 10,000-strong taxi fleet consists of vehicles that are petrol-electric hybrids or fully electric.

Its subsidiary SBS Transit is already operating 20 electric buses, with a further 10 slated for despatch.

Applauding the government's commitment to sustainability and the promotion of electric vehicles, the company's chief communications officer Tammy Tan said: "As an operator, we have a large fleet of hybrids and have been trialling electric vehicles, with the intent for mass rollout once they become commercially viable."

ComfortDelGro's hybrids and electric vehicles serve far more people than clean-energy vehicles that are privately owned, and they clock up far more mileage on the roads. Hastening the company's move towards a fleet that is fully electric could make a significant difference to the environment.

Moreover, as a commercial entity, ComfortDelGro is likely to respond to incentives and subsidies in a more business-like way than individuals. Certainly, it won't be purchasing vehicles simply because they accelerate faster than a Lamborghini.