Abstract:

The developments in electric vehicles (EVs) are driven by the agenda of cleaner and more efficient transport. The manufacturing cost of EVs are higher than that of internal combustion engine vehicles (ICEVs) mainly due to cost of batteries. The fuel economy of EVs are much better than ICEVs when measured by kilometers per unit of energy consumed, but the total mileage of EVs are much lower than that of ICEVs on a full-tank or full-charge. With the current state of developments in technology and infrastructure, the total vehicle cost of an EV is much higher than that of an ICEV. In the case of Singapore, vehicles are also subject to the Certificate of Entitlement, which restricts the lifetime of a vehicle to a maximum of ten years from the date of registration. Vehicles sold in Singapore are also subject to tax/rebate on the basis of the Carbon Emission-Based Vehicle Scheme (CEVS). In this study, the authors attempt a challenging question whether there is a business case for EVs in the absence of policy support. Revisiting the tax structure for vehicles and fuels in Singapore, reining vehicle population growth would imply significant reduction in land transport tax revenue. Because the goal of limiting vehicle population growth is to alleviate traffic congestion, the authors believe that there are viable commercial models for encouraging the adoption of EVs that benefit both the government and customers.