Singapore commercial EV sales to see boost from incentives, but limited options a barrier: Fitch Solutions
SINGAPORE’S range of electric vehicle (EV) purchase incentives is expected to boost both passenger and commercial EV sales in the near term, albeit at varying paces.
In a report issued on Monday (Nov 28), Fitch Solutions Country Risk & Industry Research projected a 394.6 per cent growth in Singapore’s EV sales for 2022, driven mainly by government incentives. It nonetheless cautioned that the limited commercial EV options available in the city state will “remain a significant barrier to adoption” as it believes commercial EV sales is “highly dependent on model availability”.
According to Fitch Solutions, Singapore’s Commercial Vehicles Emissions Scheme (CVES) is a key motivator for businesses to adopt cleaner commercial vehicles (CVs). The scheme includes penalties of S$10,000 for the most polluting vehicles, while electric CVs qualify for up to S$30,000 in incentives.
The CVES’ impending expiry in 2023 is however expected to lead to a drop in commercial EV sales. As such, Fitch Solution forecasts Singapore’s commercial EV sales to contract by 47 per cent to reach just 826 units in 2023.
Over the longer term, the company expects commercial EV sales in Singapore to average annual growth of 28.5 per cent to reach an annual sales volume high of just over 4,500 units by end-2023.
Other EV purchase incentives offered in Singapore include the EV Early Adoption Incentive, which grants new electric car and taxi owners a 45 per cent rebate off the Additional Registration Fee, capped at S$20,000.
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Under the present Enhanced Vehicular Emissions Scheme, cars now qualify for a rebate of S$25,000 for cars in Band A1, and S$15,000 for cars in Band A2.
Fitch Solutions expects such policies to likewise drive passenger EV sales in 2023 – albeit at a slower place amid a weakening global economic outlook.
Passenger EV sales in Singapore are forecasted to grow 36.9 per cent next year to reach an annual sales volume of around 12,200 units, with locally assembled EVs to aid adoption.
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This is especially so with Hyundai’s new small-scale vehicle production, research and development centre due for completion by end-2022.
“We note that the assembly of EVs locally by Hyundai offers strong upside risk to our forecast as locally assembled vehicles will be more affordable than imported vehicles and will provide a stable supply,” said Fitch Solutions.
Total passenger EV sales in Singapore are expected to register an average annual growth of 14.2 per cent year-on-year over 2023 to 2031, to reach an annual sales volume of just over 30,000 units by end-2023.
Yet in Fitch Solutions’ view, there is room for even stronger growth given Singapore’s “wealthy population” – especially as the cost of EVs moderates in Singapore in tandem with rising internal combustion engine vehicle prices.
In all, Fitch Solutions has forecasted Singapore’s total EV fleet to reach just under 255,000 units by end-2031 to represent an EV penetration rate of 27.3 per cent. Singapore’s total EV fleet in 2021 was 4,096 units following a 114 per cent expansion, representing an EV penetration rate of 0.5 per cent.
“We expect an acceleration of EV charging infrastructure developments as the government looks to kickstart its nascent EV industry,” it added.
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