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2017 FRT Renewal

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I understand my views are against the interests of the users of this forum. To have a sustainable technology, we need to have the public support, but I believe it is hard to justify a 100% tax exemption.There are people (myself included) who are getting their first car in HK because of the great EV incentives. In US, the EV incentive is about $10k USD, in HK it is 100% car price. I am not sure how....

You're very thoughtful! I agree the EV's FRT incentive should be gradually decreased, but not until EV reaches over 5% in HK market.
IMO If current MS costs over 1.2M HKD, I will go for MB, BMW, or Audi and wait for couple more years for sure. Shouldn't EV with less components be cheaper?
If you think free FRT doesn't make sense, maybe you could donate 50% of saving to support HK EV group:smile:
 
The Model S is the first car for me (in Hong Kong), and my first EV (anywhere). If it wasn't for the high price of a Nissan Leaf, I might have gotten that instead (very low value for money because of Nissans greed, exploiting the FRT exemption). Now with the Model S on the market, Nissan finally cut their exorbitant profits down to something reasonable - but it's too late. They probably sell one Leaf for every 20 Model S. Tesla did NOT have the greed, the same prices (before taxes and shipping) are applied everywhere, rather than Nissans model of "adjusting it up to how much the market can take" to maximize profits.

A Model S is actually a bit large for my preference, but it's the only EV so far that doesn't have to be charged after every single trip (more or less). Leaf, i3 and so on ... perfect size but too expensive and too short range (the typical EV issues). When the Model III (or similar) is out, it will by far outsell Model S and X, as long as the price is low and range is fair (at least 250 km).

If it wasn't for the Model S, I would still have been taking fossil fuel burning taxis and diesel sprouting buses. OK, as the BYD e6 taxis starting to come, I called those drivers directly, when possible. When I saw one down the queue I would skip the Toyotas and go straight to the BYD (nice car, btw)

Surely, they didn't cancel any bus routes because I stopped taking the bus. Standing at a bus stop for more than 20 minutes in 30C and 100% humidity is a challenge, especially for a viking like me who feels 25C is a heat wave (when it's humid), 15 is pleasant and -20 is coldish. And no bus schedules, you rarely know when the next bus is coming.

If the FRT exemption was taken away entirely in 2017, for sure the market would die overnight so that only the really reach and environmentally conscious would keep buying. Look at Singapore for instance, where a Model S would have cost 2+ M HKD, maybe even 3M? It's not even sold there, you have to buy it in Hong Kong (for instance) and bring it in yourself.

FRT must stay as it is, to 2020 or so. After that, expecting EVs to be in proper mass production and battery prices lower year after year, the exemption could be taken out gradually over some years, until one day ICE vehicles will be entirely forbidden and/or very heavily taxed on FRT and road tax (except for special purpose vehicles).

By THEN the exemption could start to be cut from the top down, so we don't get "8M$ EV sports cars with no FRT at all".

Like so many other new technologies, it's slow in the beginning. Enthusiastic first movers - like us - will help start it up, so that eventually it will be for everyone. By 2025, buying an ICE will be the exception, hopefully, and EVs should rule the streets. Congestion will still be there, but it will be much more quiet and much less polluted.

And people will have to look rather than just listen, before they cross the street!
 
It depends on what the purpose is of FRT and the EV exemption. Is the EV exemption meant to reduce pollution around the car, and/or congestion? In my view, it only really helps with reducing pollution around the car, but it does not help in reducing congestion. I'd rather have reduced pollution AND reduced congestion, but if I had to choose between one or the other, assuming the other quality remained equal, and given how bad our air quality is most of the year, I'd grit my teeth and go for a reduction in pollution over congestion. After all, reducing congestion can (theoretically, at least) and should be effected via other measures such as proper law enforcement of no-stopping/no-parking zones, punitive fines, and ERP.
 
It depends on what the purpose is of FRT and the EV exemption. Is the EV exemption meant to reduce pollution around the car, and/or congestion?

The clear purpose of the FRT is to reduce congestion. It is to dis-incentivise the purchase of private cars by taxing their purchase heavily thereby making them unattractive. Just have a look at the different rates for private cars vs motorcycles vs commercial vehicles. It is pretty clear who is being hit the hardest.

The stated purpose of the EV FRT exemption is to reduce pollution (presumably by displacing petrol vehicles with battery EVs, for new purchases).

For example, see:

The 2014-15 Budget - Budget Speech
A Liveable City
For years, we have been promoting the use of electric vehicles by exempting them from First Registration Tax. I propose to extend the tax exemption by three years up to 31 March 2017.

Also: Promotion of Electric Vehicles in Hong Kong | Environmental Protection Department

In most countries, tax/sales incentives are there to offset the increased cost of the batteries. To subsidise the purchase price of an EV and make it competitive (and attractive) to purchasers. In Hong Kong, historically it has gone further - the word 'promoting' is used again and again, which means actively encouraging.
 
I, too, get the impression that the main purpose of Hong Kong to promote EVs is to improve air quality. Unlike many other Countries, promoting EVs for environmental reasons such as reduce fossil use, and to achieve the goal of energy independent (with renewable). It seems very likely that the incentives will still be available for large and commercial vehicles such as electric buses; and incentives for "new" EVs would be reduced or eliminated to reduce traffic congestion. However, I do believe the cost of ownership in EVs is much much less than ICEs in the course of 10 years. There was a cost of ownership comparison chart published (Plug In America or Green Car Congress?). But I don't think HK drivers keep their cars for 10 years, do they?
 
I, too, get the impression that the main purpose of Hong Kong to promote EVs is to improve air quality. Unlike many other Countries, promoting EVs for environmental reasons such as reduce fossil use, and to achieve the goal of energy independent (with renewable). It seems very likely that the incentives will still be available for large and commercial vehicles such as electric buses; and incentives for "new" EVs would be reduced or eliminated to reduce traffic congestion. However, I do believe the cost of ownership in EVs is much much less than ICEs in the course of 10 years. There was a cost of ownership comparison chart published (Plug In America or Green Car Congress?). But I don't think HK drivers keep their cars for 10 years, do they?

Even if you don't keep your car for 10 years, someone else will keep it. I intend to keep mine for as long as I can, but then, I'm probably not your average car owner in Hong Kong!

Apart from the FRT exemption, it will really depend on charging infrastructure in Hong Kong. This subject keeps coming back, and we WILL see stories soon in media about disgruntled owners speaking up: "I can't charge my car" and so on. Unfortunately, they will most likely blame the car, while it's the infrastructure that is the problem. EVs are perfect for Hong Kong, but we need those chargers all over the place.

Besides the actual space in parking lots, and ICEing, business models are a problem. Who will pay for the charger installations, and the electricity they pump out? Can it be contained in the parking fees as it is?

If the FRT exemption dies in 2017, so will further EV progress.

Buses and lorries already carry a lot less FRT, hence an exemption is not worth the same. At the CPU conference that we recently attended, bus companies were complaining left and right, about various issues. Mainly that they cannot charge most places as chargers are generally located in private car parks that are too small for buses. Who will supply the land required for charging the buses? Who will supply engineers and mechanics to keep the buses operational?

There is a huge potential here for EVs. With solar panels and wind turbines, Hong Kong can - if the willpower is there - power it's own traffic infrastructure. At least, a great deal of it.

So we have got to come up with a practical report focused on solutions, not problems. This will include the FRT exemption, as a temporary tool to shift cars from ICE to BEV, but also charging infrastructure and renewable energy generation.
 
The clear purpose of the FRT is to reduce congestion. It is to dis-incentivise the purchase of private cars by taxing their purchase heavily thereby making them unattractive. Just have a look at the different rates for private cars vs motorcycles vs commercial vehicles. It is pretty clear who is being hit the hardest.
...
The stated purpose of the EV FRT exemption is to reduce pollution (presumably by displacing petrol vehicles with battery EVs, for new purchases).

Yes, I thought so. But the EV FRT exemption arguably increases (or at least does not help with ) congestion.

On that note, our bureaucracy is slowly rumbling into action... Transport Bureaus responsibility to curb growth in car numbers: Loh | South China Morning Post ... if we are very lucky and the people in TD get their act together, maybe we will have much less congested roads and much less pollution in place...

... by 2037. Heh.
 
Yes, I thought so. But the EV FRT exemption arguably increases (or at least does not help with ) congestion.

I'd agree with 'does not help with', but how does it increase congestion? Given that the prices of the cars, even with FRT exemption, are still significant. I really don't think there are a huge number of owners buying EVs who would NEVER have purchased a petrol car. I'm not saying NONE, but given the prices of the cars, it is likely that those few would be taking equally congesting forms of transportation anyway.

Congestion, and measures to affect it, are really complicated. I spent the first couple of years of my professional life working for Transport Road Research Laboratory in UK, and supported teams of people working there on the problem. Interestingly, in those days Hong Kong was used as a test bed for many experimental technologies such as Electric Road Pricing.

For example, driving your private car to dinner and back vs taking a taxi has no impact on congestion - in fact, arguably it reduces congestion as the private car is in active use for 100% of the time it is congesting the roads, while taxis have time they are just spinning their wheels looking for a fare to pickup. Worse, if you pre-book the taxi, they are congesting while coming to pick you up. Even having more cars has no direct impact on congestion - say someone has 10 cars in their garage but can only drive 1 on the roads at a time, as an extreme example. What impacts congestion is either reducing the number of vehicle miles travelled on the roads (e.g. avoiding the journey altogether), making more use of the road space (ride sharing, buses, trains, etc), or spreading the load (peak vs off-peak). There are also measures related to the road systems themselves that can have an impact (smarter traffic lights, and better traffic control in general - all related to smoothing out the road network so the traffic is better spread across the entire network).

What we are talking about with the FRT exemption and promotion of EVs in general, is simply displacing a petrol car for an equivalent EV. That is the goal, anyway.
 
If I was a man on the street, I would rather the gov't charge tax on EV though at a lesser level than an ICE. Then use this tax for cleaning up the air. I am sure that money can be more efficient at managing air pollution than having a Tesla replace a BWM/Benz. A lot of our air pollution suprisingly comes from the frieght ships that are coming in and out of HK's ports. We should not kid ourselves that by consuming a Tesla car, we are in any way green and clean. We are just doing better to the guy in a BMW/Benz or perhaps less since we didn't donate to the HK govt treasury.
 
If I was a man on the street, I would rather the gov't charge tax on EV though at a lesser level than an ICE. Then use this tax for cleaning up the air. I am sure that money can be more efficient at managing air pollution than having a Tesla replace a BWM/Benz. A lot of our air pollution suprisingly comes from the frieght ships that are coming in and out of HK's ports. We should not kid ourselves that by consuming a Tesla car, we are in any way green and clean. We are just doing better to the guy in a BMW/Benz or perhaps less since we didn't donate to the HK govt treasury.

Promotion of Electric Vehicles in Hong Kong | Environmental Protection Department

Electric vehicles (EVs) have no tailpipe emissions. Replacing conventional vehicles with EVs can help improve roadside air quality and reduce greenhouse gas emissions. A wider use of EVs also contributes to the development of environmental industries.

Or:

Benefits of using EV


The scientific consensus is that driving an EV is less polluting than driving an equivalent petrol vehicle.

80% of the roadside pollution comes from 20% of the vehicles, and those 20% of the vehicles are not private cars. Sure, the government needs to work on the commercial polluters (trucks, light goods vehicles, ships, etc), but that doesn't mean they should just ignore private cars. As the EPD itself says: "A wider use of EVs also contributes to the development of environmental industries".
 
I'd agree with 'does not help with', but how does it increase congestion? Given that the prices of the cars, even with FRT exemption, are still significant. I really don't think there are a huge number of owners buying EVs who would NEVER have purchased a petrol car. I'm not saying NONE, but given the prices of the cars, it is likely that those few would be taking equally congesting forms of transportation anyway.

You may be right, although I'm quite sure that at least a few people will be attracted by the idea of having a "green" car, rather than just a car. Moreover, it's clear that there is an appetite for cars in HK. But let's stick with "does not help with".

Congestion, and measures to affect it, are really complicated. I spent the first couple of years of my professional life working for Transport Road Research Laboratory in UK, and supported teams of people working there on the problem. Interestingly, in those days Hong Kong was used as a test bed for many experimental technologies such as Electric Road Pricing.

That's interesting to know. It's incredibly disappointing that we have stood still on ERP while other places have adopted it to great effect for many years.

For example, driving your private car to dinner and back vs taking a taxi has no impact on congestion - in fact, arguably it reduces congestion as the private car is in active use for 100% of the time it is congesting the roads, while taxis have time they are just spinning their wheels looking for a fare to pickup. Worse, if you pre-book the taxi, they are congesting while coming to pick you up. Even having more cars has no direct impact on congestion - say someone has 10 cars in their garage but can only drive 1 on the roads at a time, as an extreme example.

What impacts congestion is either reducing the number of vehicle miles travelled on the roads (e.g. avoiding the journey altogether), making more use of the road space (ride sharing, buses, trains, etc), or spreading the load (peak vs off-peak). There are also measures related to the road systems themselves that can have an impact (smarter traffic lights, and better traffic control in general - all related to smoothing out the road network so the traffic is better spread across the entire network).

As to the first paragraph, is that absolutely correct? As a layman, I look at it this way - the taxi is on the road anyway and its job is to get people in and out of a district. If I take the taxi into the district then it is unlikely it will hang around there, and in fact someone else can get into the cab and be driven out of the district, making sure that people move. If I had gotten into my car and driven it then parked it in the carpark in the district then no-one can leave the district at the same time. Not to mention all the space that is taken up by car parks to store cars for say 2-8 hours/day. Perhaps I am confusing congestion with transport efficiency?

More importantly, I view congestion from the point of view not only of cars v other motorised vehicles, but cars v other forms of transport (motorised and non-motorised), in particular bicycles. However, that and other issue are covered in your second paragraph.

A further problem which arises in HK and which is (I think) largely peculiar to congestion in HK is the usage of private drivers. This causes at least the following problems. Firstly, many people want their driver to wait no more than 10-15 minutes away from where they are, particularly at times when they want to be picked up (usually rush hour). This causes congestion NOT in a/the carpark, but in other areas where there should be no congestion. Secondly, some people go even further and think that their car should be able to wait for them for, say, 15 minutes on Queen's Road Central at 6:30pm on a Friday night, rather than, like mere mortals, themselves going to the are a bit earlier to wait for the car.

This gets worse when one considers that the mentality held by some (most?) people with private drivers, which is "I have and have paid for a car and driver, so I might as well use it (to maximum effect)." So even if people are considerate, they may forego taking public transport - the aforementioned taxis - simply because they would rather prefer to wait another 5-10 minutes for their car.

Of course, there has to be a balance, as otherwise everyone would take taxis and there would be none available, but on busy roads and at busy times it is clear that such has been upset in the wrong direction. The best example of this is, again, Queen's Road Central in the evenings when two to three cars waiting in 1 lane clogs up the middle lane, and sometimes even the right-hand lane, bringing traffic to a halt. It is at those times and on such roads that something like a coherent policy involving ERP and/or proper traffic/parking enforcement is useful, since it tells people that they have to contribute more to the public purse for the convenience and for inconveniencing others through congestion and (for fossil fuel vehicles) air quality.

I agree that at least the roadside air quality would be better if all of these cars were EVs, but it would NOT solve the problems of congestion caused by there being too many private motor vehicles on the road at a particular time and place.

What we are talking about with the FRT exemption and promotion of EVs in general, is simply displacing a petrol car for an equivalent EV. That is the goal, anyway.

Yes, I think that is laudable.

If I was a man on the street, I would rather the gov't charge tax on EV though at a lesser level than an ICE. Then use this tax for cleaning up the air. I am sure that money can be more efficient at managing air pollution than having a Tesla replace a BWM/Benz. A lot of our air pollution suprisingly comes from the frieght ships that are coming in and out of HK's ports. We should not kid ourselves that by consuming a Tesla car, we are in any way green and clean. We are just doing better to the guy in a BMW/Benz or perhaps less since we didn't donate to the HK govt treasury.


I agree, but the proposition only works IF the Government uses the money to clean up the air. We have a massive warchest which is the result of John Tsang forecasting a deficit every year which then magically turns into a huge surplus. Yet we also have well-known air quality problems which our Government seems to be incapable of remedying. It might be that some of them would be more sympathetic if they took public transport rather than chauffered Phateons.

However, I do think that using a Tesla or an EV is, all things being equal, better for roadside pollution than someone else in an equivalent vehicle powered by an ICE..
 
In Denmark, the FRT exemption equivalent is such that the normal 25% VAT is paid, even on EVs.

With ICE cars FRT being even higher than in Hong Kong (believe it or not), the general opinion is often that

"Tesla cars are luxury items for the upper class, and the neighbour is paying for it with his/her ICE car"

This despite the fact that for each Tesla Model S sold

- there is a revenue of 150,000 HKD or more
- there is less pollution and noise (Denmark has 40% of energy from wind turbines)
- a lot of people who buy a Model S (and soon X) would NOT have bought an equivalent ICE car

In Hong Kong, if it wasn't for the Model S, I wouldn't have had any car at all. I would have taken taxis instead, and buses and trains. OK, I would have considered the i3, if it was a bit cheaper and had a longer range.

And like that it is in Denmark, and many other countries: Those people who bother to help the EV revolution are being looked down upon by those who don't.

And if those people with ICE cars really think they are being robbed: Why didn't they get an EV themselves then?

FRT and the equivalent, will be interesting to see in the near future. Especially changes in last minute legislation, like if the HK Legco turns FRT exemption down entirely in 2017, just short of the deadline.
 
I have just replied to the original FRT thread:

Hong-Kong-First-Registration-Tax - post #116

What is really interesting about a gradual phase-out of the FRT exemption is not only to avoid a hard kill of all EV sales overnight, but also that it would actually be even more efficient to accelerate the process of changing ICEVs to EVs - than the current way.

With EV FRT being at 0% until April 2017, a lot of people could be tempted to either buy and ICEV, or defer changing it to EV. If the FRT was slowly increasing, there would be a huge incentive to act sooner. Starting January 1st, 2018, a monthly slow increase in FRT for EVs would certainly introduce a strong boost.

Adding to that - it's essential that we keep pushing for a better charging infrastructure. The increasing demand, though, will itself push for more chargers, especially when free charging expires and we have to pay for electricity at any charger except supercharging stations.