2017 FRT Renewal

[markwj]

My thoughts on yesterday's budget

Firstly, let's all stop to take a breath (not too deeply - remember our air is polluted). Sure, this is undoubtedly a setback for Electric Vehicles in Hong Kong, but does anybody really think we will be driving petrol cars in 10 or 20 years time? This government policy change will merely delay the inevitable, not change the end result. It is terrible that in the meantime, more Hong Kong people will have to get sick and die from our air pollution.

I'm not sure if this is political retaliation against John Tsang, or just a short-term cooling-off measure introduced in response to the dramatic growth in the number of EV private cars. Whichever, it is a short term measure for 1 year only. Many are reading that as a negative, but it could equally be a positive.

To be clear, I am 100% against this policy change. The government's stated reasoning is control of private car ownership, but this penalises the 1% of the problem that is EVs, while not affecting the 99% of the problem that is the petrol/diesel vehicles producing the pollution. The purpose of EV incentives is to persuade buyers to purchase clean electric vehicles vs equivalent petrol/diesel polluters, not to cause growth in private car ownership.

Our Transport Department statistics on vehicle registrations clearly show that the growth rate has been slowing in recent years. There is nothing to show EVs contributing to that growth disproportionally. We must also remember that Hong Kong has one of the lowest (if not the lowest) private car ownership rates in the world - we are ranked #117 (just above Samoa, Sri Lanka, and Peru). Above us is Singapore (#93), Taiwan (#52), and United Kingdom (#34). Our private car ownership rate is just 1/2, 1/4 and 1/6 of those countries. Even when comparing against cities (not countries), our private car ownership rates are amongst the lowest in the developed world. If the goal is truly to reduce the growth in private vehicles, and FRT is the chosen tool, then FRT should be increased for ALL vehicle types - why penalise EVs (which are the only vehicle type affected by this budget)?

According to the Hong Kong University school of Public Health, last year our air pollution resulted in 1,686 premature deaths, 113,000 hospital bed days, and 2.6m doctor visits - with a total economic loss of HK$21 billion. Nothing in this budget adequately addresses these issues. Electric vehicles today make up less than 1% of the private car fleet, and the numbers for commercial vehicles are significantly lower than that. In this infancy of Electric Vehicles in Hong Kong, it is far too soon to withdraw the support.

It is abundantly clear that the net result of this policy change will be that the commercial sector will continue to ignore electric vehicles and the result will be more polluting petrol and diesel vehicles on our roads. In the private sector, we will see more petrol and a lower percentage of electric private vehicles.

None of this is good for the people of Hong Kong or the air that we breath.

Mark

 

[Mille Pun]

Can we make a campaign to object and persuade?

 

[mkq786]

Yes, so you need to rush Tesla!

There is no need as all cars ordered before 22 Feb at 1100 can enjoy the tax exemption irrespective when car will be delivered. Its different from what Tesla told us earlier.

 

[mkq786]

My X is being shipped to HK. I can still have the waiver only if it can be registered on or before 31 March, right?

No, there is no need as all cars ordered before 22 Feb at 1100 can enjoy the tax exemption irrespective when car will be delivered. Its different from what Tesla told us earlier.

 

[FequalsMA]

Is there some legal loophole to make the new cars into 2nd hand cars, like what some of the other manufacturers do with european delivery?

 

[YOLO]

I have had my model S for couple of months. When I did my research, the price for a 90D is equivalent to Benz S550 in US. So the price for model S is a big bargain here. That is a huge margin built in in model S.

Hope tesla would lower the margin to cope with the tax incurred under the new policy. Make tesla EV more affordable.

 

[mattse]

The commercial wavier is only valid until next year though.

Let's say someone does start such a business and he only get 100 orders which every new owner pays him $100k, that's already a 10M business. You don't need much to start doing this and I believe people are willing to pay more than $100k instead of the current tax

Is there some legal loophole to make the new cars into 2nd hand cars, like what some of the other manufacturers do with european delivery?

You can just follow the same loophole, question is whether Tesla HK will service these parallel import and you likely won't have mobile connection on these Tesla imported by someone else

 

[mattse]

I have had my model S for couple of months. When I did my research, the price for a 90D is equivalent to Benz S550 in US. So the price for model S is a big bargain here. That is a huge margin built in in model S.

Hope tesla would lower the margin to cope with the tax incurred under the new policy. Make tesla EV more affordable.

As far as I remember, Tesla is marking 20% (or 30%?) up from the production cost of model S and X as sale price. This is to make money for further R&D on EV, building factories and making mass production of model 3 possible. Model S / X is not meant to be the affordable EV

 

[FequalsMA]

Let's say someone does start such a business and he only get 100 orders which every new owner pays him $100k, that's already a 10M business. You don't need much to start doing this and I believe people are willing to pay more than $100k instead of the current tax

Yes it's lucrative, but it's not a long term solution.

You can just follow the same loophole, question is whether Tesla HK will service these parallel import and you likely won't have mobile connection on these Tesla imported by someone else

"European delivery" programs allow you to go to europe to pick up your car, drive it around for a few days and give it back to the manufacture and they will take care of the rest of the delivery to your dealer in your the country of residence/ purchase. This is different from parallel importers/ grey market.

 

[Optic]

Yes, seems harsh that the FRT exemption went from 100% to say about 10% for a Tesla. Was expecting the regulators to meet in the middle. The HK forums seem to be happy to see the exemption be capped at 98k though, the previous exemption was seen as too much incentive for a EV.

 

[mattse]

Yes it's lucrative, but it's not a long term solution.

I meant someone will do this given the incentive

I did not know there is such "European programme". I just know the parallel import way. Anyway, just wish to point out things get more tricky for Tesla as you don't have / need connectivity in most ICE. There are quite a few good mechanics out there who know how to fix any issue, thus there is no need to go back to the dealership at all for ICE. For Tesla, you will need some sort of things from Tesla HK

 

[Captain_Kong]

Food for thoughts:

- On the legal loophole of 2nd hand vehicles purchased overseas - the HK customs / RTA applies tax on the assessed value, and they don't follow blindly and tax on the "reported" 2nd hand value...

- On the policy shift - another example of a gutless govt using EV as a convenient excuse and CAVING to the ICEs lobby. Let's just face it, this is THE reason that they're rolling back on the tax exemption.

If this policy change is to control the overall car population in HK - a totally flawed argument and misguided policy attempt. From personal experience (could be a biased sample...), all Tesla owners that I know are replacement demand drivers, and there are multiple cases where 1 Tesla is replacing 2 cars! How can we be (indirectly) labeled as causing the increase in car population in HK. Please show me and convince me with the statistics otherwise.

To follow the govt's line of argument and based on imperfect sampling - in order to control or slow the growth of cars in HK, the govt. could have taxed small MPVs such as Freed, Noah, Serena, etc. 200% for example. Many of these are purchased by 1st time car buyers (old or new) and I'm certain this will slow the car population by over 10%! I am not advocating this is to be the policy, but to illustrate that the govt is intentionally misrepsenting what they're doing and CAVING to the ICEs.

Disclaimer: in addition to being a Tesla driver, I'd always have a spot for an ICE : )

 

[FequalsMA]

Food for thoughts:
- On the legal loophole of 2nd hand vehicles purchased overseas - the HK customs / RTA applies tax on the assessed value, and they don't follow blindly and tax on the "reported" 2nd hand value...

Thanks for clarifying that.
In reference to a similar case where a country dropped their tax exemptions on EV (Germany, I think?), Tesla responded by offering clients a de-contented tesla, where the car shipped with AP and barely any software/ features available and then making these available as an after purchase add on.
I think that's what we're going to have to do here.
Although it might mess with the value your car in the eyes of insurance.

- On the policy shift - another example of a gutless govt using EV as a convenient excuse and CAVING to the ICEs lobby. Let's just face it, this is THE reason that they're rolling back on the tax exemption.

We should also keep in mind EV proliferation will have a trickle down effect on secondary industries like gas stations, auto shops, sale and distribution of parts, resale/ secondhand ICE car market which will all mostly be negative.

While I too love ICE cars, I cannot be more vocal about the lack of choice and purposeful offering of de-contented vehicles sold by franchisees here. I would not be surprised if they are all colluding with one another to purposely try and sell the cars with the least features at the highest price. It's all a race for how to squeeze the most revenue and margins from buyers. Direct Sales FTW!

 

[gubes]

My thoughts on yesterday's budget

Firstly, let's all stop to take a breath (not too deeply - remember our air is polluted). Sure, this is undoubtedly a setback for Electric Vehicles in Hong Kong, but does anybody really think we will be driving petrol cars in 10 or 20 years time? This government policy change will merely delay the inevitable, not change the end result. It is terrible that in the meantime, more Hong Kong people will have to get sick and die from our air pollution.

I'm not sure if this is political retaliation against John Tsang, or just a short-term cooling-off measure introduced in response to the dramatic growth in the number of EV private cars. Whichever, it is a short term measure for 1 year only. Many are reading that as a negative, but it could equally be a positive.

To be clear, I am 100% against this policy change. The government's stated reasoning is control of private car ownership, but this penalises the 1% of the problem that is EVs, while not affecting the 99% of the problem that is the petrol/diesel vehicles producing the pollution. The purpose of EV incentives is to persuade buyers to purchase clean electric vehicles vs equivalent petrol/diesel polluters, not to cause growth in private car ownership.

Our Transport Department statistics on vehicle registrations clearly show that the growth rate has been slowing in recent years. There is nothing to show EVs contributing to that growth disproportionally. We must also remember that Hong Kong has one of the lowest (if not the lowest) private car ownership rates in the world - we are ranked #117 (just above Samoa, Sri Lanka, and Peru). Above us is Singapore (#93), Taiwan (#52), and United Kingdom (#34). Our private car ownership rate is just 1/2, 1/4 and 1/6 of those countries. Even when comparing against cities (not countries), our private car ownership rates are amongst the lowest in the developed world. If the goal is truly to reduce the growth in private vehicles, and FRT is the chosen tool, then FRT should be increased for ALL vehicle types - why penalise EVs (which are the only vehicle type affected by this budget)?

According to the Hong Kong University school of Public Health, last year our air pollution resulted in 1,686 premature deaths, 113,000 hospital bed days, and 2.6m doctor visits - with a total economic loss of HK$21 billion. Nothing in this budget adequately addresses these issues. Electric vehicles today make up less than 1% of the private car fleet, and the numbers for commercial vehicles are significantly lower than that. In this infancy of Electric Vehicles in Hong Kong, it is far too soon to withdraw the support.

It is abundantly clear that the net result of this policy change will be that the commercial sector will continue to ignore electric vehicles and the result will be more polluting petrol and diesel vehicles on our roads. In the private sector, we will see more petrol and a lower percentage of electric private vehicles.

None of this is good for the people of Hong Kong or the air that we breath.

Mark

Long term I 100% agree that its inevitable that EVs take over even if there are zero subsidies, waivers etc compared to regular ICE vehicles. A lot of the research I have done suggests that in the next decade, EVs will be competitive with ICEs even at price points below US$40,000 and offer superior performance and packaging and low running costs while range will continue to improve and all established car manufacturers will start producing them in mass once the battery pack cost goes sub US$100/kwh which should happen some time in the 2020s.

Until 2020 however, only Tesla, Jaguar (iPace) and 1 or other niche models would be offering convincing purchase options to compete with ICEs. This will all change from 2020.

If I was forced to sell my Tesla in the next year or so for whatever reason, I would buy something like a Golf GTI and then wait till the 2020s to purchase the next EV unless I can be convinced that the Model 3 is well built and offers an attractive price and has enough desirability. I have my doubts though. While I don't expect another Model X disastrous roll-out, I really would want to avoid the early Model 3s, which means realistically you are looking at 2019 by the time you can feel comfortable ordering one in HK. Ramping up production from 100k to 400k units a year doesn't come without teething problems I am sure.

 

[Captain_Kong]

I'd add Lucid Air to the cross-shop list by 2020, if it gets build(!)

 

[wongsters]

2020...that doesn't sound too far off. My 2015 MS would last that long, I hope.

Separately, with the number of EV probably stalling at current level (plus whatever have been ordered) for some time, I wonder if the government's initiative to install EV charging bays in public carparks will come to an end as well.

 

[tfung]

It seems to me that with this change in FRT, cheaper EVs will benefit the most.. Not i3 or model 3... I'm talking about the Japanese and Chinese EV brands which would benefit the most from the exemption... I'm not sure if people understand that Tesla is really a high end luxury brand and that the government views that this segment can afford the tax. The thinking is probably if a potential EV buyer really wants to be green and save money, they can buy the cheap ones that fall within the tax exemption bracket...

 

[lx3h]

Hong Kong cancels electric vehicle incentives that made it a leading EV market dominated by Tesla
Hong Kong cancels electric vehicle incentives that made it a leading EV market dominated by Tesla

 

[miimura]

Thanks for clarifying that.
In reference to a similar case where a country dropped their tax exemptions on EV (Germany, I think?), Tesla responded by offering clients a de-contented tesla, where the car shipped with AP and barely any software/ features available and then making these available as an after purchase add on.
I think that's what we're going to have to do here.
Although it might mess with the value your car in the eyes of insurance.

The German rule was more simple than that. Any model type with a base price above a certain number was excluded from the incentive program. This price was slightly below the base Model S 60, so Tesla removed some standard equipment from the base model so that the starting price was below the threshold. Anyone who ordered the car the way they wanted was included in the incentive program because the Model S overall now had a base price that made it qualify for the program. There was no "enable later" or "purchase later" strategy necessary.

 

[ck1116]

This policy is to force people to switch from EV to ICE, not to reduce overall private car numbers. Cleary, his priority is "money", while "public health and better roadside air" aren't his concern at all.
From some news and magazine, I have reasons to believe that he is a very greedy person, and he needs to do something to help the government make money, then he can climb up to upper positions.
After this policy, whoever plan to buy Tesla X or S will buy previously similar priced ICE cars instead, assume average HK$500k tax per car x 3000 cars per year, the extra FRT income will be 1.5 billion per year.