Singapore Markets close in 7 hrs 27 mins

Electric car race is on, but infrastructure needs to keep up

Benjamin Cher

SINGAPORE (Dec 31): From 2019, only hybrid or electric cars will be rolling off the production lines at Volvo. The Swedish carmaker, now owned by Chinese company Geely, said in 2017 that it would stop producing cars that rely only on fuel combustion engines. It is set to launch five electric car models by 2021, as well as offer hybrid models across its whole product line.

While Tesla grabs the most headlines, major carmakers — from Nissan Motor Co to BMW and General Motors Co — have long focused their efforts on producing electric cars as awareness and demand build. At the same time, governments are mulling bans on the sale of new petrol- and diesel-powered vehicles, as soon as in the next 10 years. In Norway, more than half of new car sales in 2017 were those of electric vehicles (EVs). Those sales were likely helped along by generous tax breaks for car owners and free or subsidised parking and charging.

Is this the end of the road for the internal combustion engine? Is 2019 the year EV sales overtake those of vehicles that run on only fossil fuel?

Car dealerships are already bringing in more electric cars to Singapore; in 2014 there was only one electric car, but in 2017, there were 314, according to the Land Transport Authority (LTA).

The public transport sector is also increasingly deploying EVs. LTA had awarded a $50 million tender for 60 electric buses to three vendors, to be delivered progressively from 2019 to 2020. HDT Singapore has offered electric taxis and private hire vehicles since 2016.

Yu Yuan-Sheng, senior analyst at market research firm Lux Research, notes that with the investment and commitments by automakers, 2018 was the tipping point for the EV market. But, EVs still make up only a very small portion of the global passenger vehicle fleet. “There are still several hurdles to overcome to get past the 5%, 10% and, eventually, 50% market share barriers,” Yu says.

Even if most consumers were aware of EVs as an option for their next car, Yu expects EVs to really take off globally only from 2035. “This would obviously vary by country, but infrastructure, cost and consumer behaviour will play key roles in the speed of adoption,” he says. “For Singapore, all three of those factors still remain major hurdles, given the environment for EVs in the country.”

Indeed, in Singapore, the list prices of electric and hybrid cars are still higher than those of regular fuel-powered vehicles, although buyers can qualify for the new Vehicle Emissions Scheme rebates of up to $20,000. Even lower, and falling, Certificate of Entitlement prices would do little to persuade consumers to switch over. “COE prices [are likely to] have little to no impact on EV adoption in Singapore,” says Yu. “Consumers don’t really care about COE when considering a car purchase, just the cost of the vehicle itself — in this case, [the price of] an EV is still at a premium over conventional vehicles.”

Yu adds: “The only way to promote EV adoption would be to subsidise and incentivise the purchase. For example, in Norway, there are tax rebates and discounts on EV purchases, as well as access to free charging and preferential parking. In China, to stimulate EV adoption, it eliminated the lottery system for a vehicle licence when purchasing an EV, making it a far more attractive choice than conventional vehicles. If we put the subsidies in the context of the COE and Singapore, it would be similar to waiving the COE fee entirely or even turning the COE fee into a rebate for EV purchases.

“Another factor could be preferential parking spots in major commercial zones (the CBD, Orchard, Marina Bay and so on). These two combined have been proven to sway potential buyers.”

However, owners of electric cars would still have to contend with a lack of charging infrastructure. While public utilities provider SP Group and electric car sharing company BlueSG have announced they would be providing public charging stations, they are unlikely to be enough to boost consumer demand significantly.

“No one will buy an electric/plug-in car that can only be charged at public stations. The charging times are too long, and it’s too inconvenient. The vehicles are all designed for at-home overnight charging,” says Walter Theseira, associate professor of economics at Singapore University of Social Sciences.

He points out that the vast majority of the population in Singapore live in apartments, whether public or private, that do not have charging points. “I do not expect that this infrastructure will be rolled out next year,” Theseira says. “Nobody who lives in an HDB flat will buy an electric or plug-in vehicle unless they have guaranteed home charging. Condo dwellers also won’t buy one similarly. That’s the vast majority of the market for cars.”

Yu echoes the view that there needs to be convenient plug-in points in apartment blocks for overnight charging while vehicle owners are at home. “Then, it comes down to the proper subsidy scheme to ‘kickstart’ EV adoption, at least in the initial years; educating the population about the benefits and automakers’ offering more attractive options — similar to the leading nations such as Norway and China,” he says.

Nevertheless, pure internal combustion engines are slowly but surely being phased out. Yu expects more hybrid cars to come on the market globally. That will serve as a “stepping stone” for the mass adoption of EVs in the future. “Automakers will be aggressively electrifying (not to be confused with full-electric) their drivetrains in the coming years,” he says.

As developments in automotive technology and modes of transport converge, automakers will have to find a way to remain relevant.

This story appears in The Edge Singapore (Issue 863, week of Dec 31) which is on sale now. Subscribe here