reasons that government is giving for introducing this cap just don't make sense, and the majority of legislative councils seem to agree
Good to see there are still rational LegCo councillors in HK
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reasons that government is giving for introducing this cap just don't make sense, and the majority of legislative councils seem to agree
After a debate, there was a non-binding vote in Legco yesterday. The majority of councilors voted in favour of retaining a full FRT waiver for Electric Vehicles in Hong Kong (ie; against the government proposal and against the cap). Of course, it is non-binding and can/will be ignored, but it sends a strong message to Government.
Particularly interesting is the reasons that government is giving for introducing this cap just don't make sense, and the majority of legislative councils seem to agree. This measure doesn't solve the private car growth issue, it doesn't solve the environmental issues, and will certainly drastically hinder the transition to sustainable transportation in HK. It doesn't even protect the low-range, relatively low-cost, EVs that Government says it is intended to.
Of course, a budget has never before been voted down by Legco, but there is a first time for everything.
I could be wrong but I don't think the budget has to be voted down in its entirety to get our way. All it takes is to convince the FS to retract his "proposal". John Tsang did change his "sweetener" from depositing $6000 into our MPF account (or something like that) to a $6000 cash payout some years ago. Of course that was after huge public outcry. This time we have all but a few thousand EV owners plus Tesla, against the almighty ICE lobbyists.
On a related note (assuming the proposed EV FRT applies going forward) - what would happen to the insured value and premium of the "legacy" Tesla fleet in HK?
Now FRT exemption is $97500HKD, it is more on par with the North America that gives you a tax break. Somehow there, Tesla is able to compete via good customer service and a great product offering.
Charged.HK has produced the following spreadsheet showing the state of Electric Private Cars in Hong Kong today:
Hong Kong Electric Vehicles
Some comments to make:
We've discussed why Tesla has been seeing such success here, when the car is significantly more expensive than other electric vehicles. In particular, we don't see this disparity in other markets with similar incentives such as Norway (where the spread of vehicle models is much more even). The answer appears to be two-fold:
- The HK$97,500 tax cap equates to a vehicle costing less than HK$200,000 being 100% FRT free (40% of $150,000 + 75% of $50,000). There are no private electric cars available on the market at that price point, so this new policy effectively taxes ALL electric private cars in Hong Kong.
- Dr Paul Chan has indicated that the new policy is intended to support an electric car costing HK$400,000. Let's look at the BMW i3 for example. At HK$451,000 (tax free), that competes directly against vehicles such as the Prius Hybrid (Super Luxury trim level) at HK$353,500. The electric car, even tax free, is more expensive than the equivalent petrol car. Considering fuel savings and ignoring charging issues, still 51 of those BMW i3 were sold in the second half of last year. But, now that we have this new tax, and even with HK$97,500 waiver, the same BMW i3 costs HK$677,000 while the price of the Prius is unchanged. How will the BMW i3 compete in this market?
- Tesla Model S clearly dominates the market.
Firstly, while Tesla offers a global 'fair pricing' model (so their cars are sold at the same price, no matter the country they are sold in, while taking into account currency, tax, and transportation costs), the other suppliers do not. When comparing against European and American prices for the same vehicles, the mark-up of the other electric cars is significantly higher. This narrows the price gap between the Tesla and the cheaper alternatives here in Hong Kong. Simply put, it is not _that_ much more expensive to buy a Tesla.
Secondly, owning a private car in Hong Kong is expensive. In particular, the cost of parking and charging infrastructure. Wealthy people are more likely to buy private cars, and by definition those people have more available money to spend. Such owners are also more likely to be able to charge at home/work (living in houses, owning their own car parks, etc). Tesla's investment into SuperCharging and Destination Charging here (which the other electric car brands have not done) is significant in easing the burden of relying on public charging.
I can't quite see how FRT would not apply to M3s, as FRT is based on date of registration.
However, as a one-off arrangement, electric private cars ordered by buyers from locally registered distributors or arranged for shipment to Hong Kong by owners before 11am (Hong Kong time) today will still be entitled to have their FRT fully waived even if they are first registered after March 31, 2017.
I think it's actually the date you confirmed your order, a binding contract with terms and specs and pricing. The M3 hasn't even been built, and therefore our deposit is a non-binding (fully refundable) reservation to be able to purchase the vehicle when available.I can't quite see how FRT would not apply to M3s, as FRT is based on date of registration.
Mark, do you know if there is any more lobbying against the EV FRT? Will it just be passed on 1 April for sure then?
As you may be aware, in the 2017/2018 budget the Financial Secretary has proposed to renew the First Registration Tax exemption for electric vehicles for just a single year, and to introduce a cap of HK$97,500 on tax exempted for electric private cars.
For more than 20 years, our government has been promoting and supporting the adoption and use of Electric Vehicles (EVs) in Hong Kong, primarily with a 100% waiver of First Registration Tax. This abandonment of that policy is troubling and will undoubtedly slow down the transition to sustainable transportation, as well as set back the excellent progress we have seen in recent years. The pollution from each new petrol/diesel vehicle put on the road today will be felt for the next 20 years of that vehicle’s life. Future generations will have to live with the decisions that we take today, and this decision is simply bad for Hong Kong’s air quality and roadside pollution levels.
We have been working for the past two years, meeting with legislative councillors, government departments, press, and others in the EV industry, to avoid this. Since the budget announcement, we have also been lobbying hard with LegCo, as well as trying to gather public support by working with the press on positive articles, letters, and other commentary. We have been on the radio, and in print. We’ve tried to keep our members informed via our charged.hk website, Facebook page, and local EV chat groups. We’ve formed a joint task force with the other EV clubs and communities. We have asked for, and received, help from our community, where we needed it.
Our official position on this is in our press release:
http://www.charged.hk/budget20172018
The personal thoughts of Mark Webb-Johnson (Chairman, Charged Hong Kong) are here:
http://www.charged.hk/node/141
Our request for our members to let government know their views (from before this budget was announced):
http://www.charged.hk/policy2017submission
And our documentation on the status of Electric Cars in Hong Kong today (used as part of our position paper to LegCo):
http://www.charged.hk/node/144
The brutal truth of the situation is that there is only one place to stop this, and that is LegCo; But, our options there are limited. Our governmental system is that even LegCo cannot change the budget. We have worked with LegCo; a non-binding vote was taken on this issue a week ago, and the majority rejected the government proposal. However, the only way of stopping this budget item is to block the entire budget - but that has never happened in the history of Hong Kong. Even if the budget was blocked by LegCo, the arrangement is that the Chief Executive dissolves LegCo, and a new council is elected. If the new LegCo also blocks the budget, then the Chief Executive resigns. His term is up anyway, so the chances of us being able to block this legislative change are slim.
We have considered responses such as a mass rally (which would demonstrate vehicle congestion, so work against us), a petition (which would gain perhaps a few hundred/thousand votes showing how little outspoken support we have), and other such actions. Again, the brutal truth is that this is not a popular incentive. Private car owners are a minority (perhaps 7% of the population), and a large portion of the rest consider this a subsidy for the rich privileged. They don’t see the transition to electric private transportation as the lead to the transition of the commercial fleet. We know differently.
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.
So, our plan is to document the situation clearly, make our viewpoint heard, and hope that LegCo can persuade the government to change the proposal. Chances of that are slim (it would mean government admitting a mistake). Even if it passes, and the FRT cap is introduced, we will continue to work against it. Perhaps in six months time, where the effect on growth in numbers of private vehicles, and resulting EV sales, can be clearly shown, we can go back and try to get a better proposal from government in the 2018/2019 budget.
I am sorry if that sounds overly negative, or not sufficient, but it is the best we can do given the situation. We all feel your pain, and consider this government proposal to be shortsighted and bad for our air quality, If you have any ideas for how we can respond further, it would be great to hear them.
Sincerely,
Charged.HK