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Open letter to Mrs Carrie Lam - Support for electric vehicles in Hong Kong

markwj

Moderator, Asia Pacific
Apr 10, 2011
4,603
1,218
Hong Kong
Dear Mrs Lam,

I am sure that you are aware of the situation with the poor air quality in Hong Kong, and in particular our roadside air quality. This is affecting the quality of life of everyone in Hong Kong. It is impacting our health, and the competitiveness of HK in the region. According to HKU School of Public Health, in 2016 our poor air quality resulted in 1,600 premature deaths, 2.6 million doctors visits, and $21.6billion direct economic loss. 2017 looked similarly bad. It is clear that the worst of the pollution is at the roadside and in the lowest floors of our buildings; and this affects the lowest privileged members of our community the most.

Governments, and Environmental Protection Agencies, around the world all conclude that electrification of transport is the correct approach to address this problem, as well as help meet CO2 emission targets.

Here in HK, we were finally making good progress. Since 2014, we have grown our fleet of Electric Vehicles (EVs) from a handful to more than 10,000; without affecting the growth rate of the private car fleet. However, in April last year’s budget the previous administration significantly capped the tax incentives for EVs; increasing the price of most by 50%, and making HK amongst the most expensive places in the world to buy an EV.

The impact of this can clearly be seen in the figures. Comparing 2017 to 2016, EV sales are down 95%, while overall private car growth is up 4%. The previous administration stated that the policy change was to reduce the growth of the private car fleet, which is obviously false. Buyers have simply switched back to buying polluting petrol and diesel vehicles.

To obtain an indication of the level of popular support for EVs, Charged Hong Kong (a local environmental charity) commissioned the HKU Public Opinion Program to conduct a telephone survey of members of the public. The results were announced at a press conference in the Legco Building by Karie Pang (Associate Director, HKU POP), along with representatives Tanya Chan, Gary Chan, and Ted Hui. Dr Kevin Tsui, and the grandfather of EVs in HK Prof C C Chan, were also in attendance. A summary of the results is:

1. General support for EVs: 81%
2. Affect of cap on FRT exemption for EVs: 62% believe this will discourage ownership
3. Support for an increase in FRT waiver: 74%
4. Support for a tax exempted switcher program (petrol/diesel to electric): 83%
5. Dissatisfaction with government support for EVs: 74%
6. Insufficient charging facilities: 86%

HK is the perfect place for EVs, but the biggest issue facing owners is the lack of charging facilities. For new buildings, we have GFA concessions for enabling EV charging. But for existing buildings, little has been done. Without legislative support, or incentives, buildings owners and management simply refuse to permit the installation of charging facilities. Without the growth in the number of EVs, charging network providers have no viable business model; the economies of scale are simply not there.

In recent years, we’ve seen more and more EV models come to the market. The manufacturers are finally making a good selection of cars available. Investments in charging networks continue, globally. As the vehicles come to the end of their useful life, the issue of what to do with the batteries is being addressed; we are seeing investment in battery re-manufacturing and re-cycling facilities for this both in Hong Kong and elsewhere around the world. We would rather Hong Kong led with this, to improve our air and quality of life.

We have some specific recommendations for your government:

1. Raise the FRT exemption cap for EVs. At the moment, it is clearly insufficient to make EVs attractive. This can be done in a revenue neutral manner, according to the ‘polluter pays’ policy.

2. Introduce a fully tax exempted “switch programme” to incentivise and encourage the change from petrol and diesel to electric vehicles.

3. Address the core problem of inadequate charging facilities in existing buildings - either by legislative support or incentives.

The last time the topic of FRT waiver was brought to Legco was in 2014. The vote then was 80% in favour of renewing the 100% FRT exemption policy for EVs. Now we have this HKU POP survey also showing 80% popular support.

With such legislative and popular support for EVs, and such clear benefits, what more does government need? We urge your new administration to make a real long term commitment; follow the lead set by other countries around the world and set a clear date by which no new petrol/diesel vehicles will be registered; then implement policies to incentivise and support that target.

Sincerely,
Mark Webb-Johnson
Chairman, Charged Hong Kong

* Open Letter: Open letter to Mrs Carrie Lam - Support for electric vehicles in Hong Kong | Charged Hong Kong
* Press Release (Chinese language): 電動香港 公佈「電動車發展政策」民意調查結果 | Charged Hong Kong
 

Mille Pun

Member
Jun 21, 2015
135
7
HK
Totally support! I also submitted several letters to the gov to offer my support on EV.

Meanwhile, a point that I can’t support, which is the 1 ICE for 1 EV plan. Buying an old ICE car is so easy, and this plan will just encourage many unnecessary trade of cars. Precisely, someone can just buy an old ICE car, and then sell it to get the tax free.

As such, I would suggest simply resume/increase the EV tax free limit, unconditionally.
 

Mille Pun

Member
Jun 21, 2015
135
7
HK
In additional, a border view on FRT would find it ridiculous.

Gov claimed that the tax is a ‘birth control’ to limit the growth of cars. However, the FRT is charged based on vehicle price. Does a $2M car contributed more to traffic jam than a $200K car? Obviously no....but the tax charged for the former is 10X times higher........Effectively it is more like a import tax, but charging roughly 100% of import tax is just ridiculous in free-port like HK. As a reference, China is charging around 25% of import tax on foreign cars.

To solve the traffic issue, the policy should focus on the ‘user’ rather than the ‘buyer’. Say, charge to those who are using the road during a jammed road/period. This can be done by technology nowadays.

I understand this is a more holistic issue over EV incentive. However, I would like to bring it out that FRT might not be a right policy to mitigate the traffic issue in HK.
 

markwj

Moderator, Asia Pacific
Apr 10, 2011
4,603
1,218
Hong Kong
Meanwhile, a point that I can’t support, which is the 1 ICE for 1 EV plan. Buying an old ICE car is so easy, and this plan will just encourage many unnecessary trade of cars. Precisely, someone can just buy an old ICE car, and then sell it to get the tax free.

The detailed design of the 'switcher plan' would be up to government to decide. The general discussion so far has been concerning the 1-for-1 scrapping of existing petrol/diesel vehicles. We have heard from Government that the reason the EV incentive was capped was to curb the growth of the private car fleet. Even though that is obviously not going to work (as no corresponding increase in FRT for petrol/diesel vehicles was introduced), the 'switcher plan' is an effective compromise for this.

As such, I would suggest simply resume/increase the EV tax free limit, unconditionally.

We simply don't think that (bringing back the full FRT waiver) will happen. No matter how much it makes sense, or how beneficial to our environment it would be, we simply doubt government will back-track and admit their policy change was wrong.

A more likely result will be an increase in the CAP and/or an increase in FRT for ICE vehicles.

Gov claimed that the tax is a ‘birth control’ to limit the growth of cars. However, the FRT is charged based on vehicle price. Does a $2M car contributed more to traffic jam than a $200K car? Obviously no....but the tax charged for the former is 10X times higher........Effectively it is more like a import tax, but charging roughly 100% of import tax is just ridiculous in free-port like HK. As a reference, China is charging around 25% of import tax on foreign cars.

To solve the traffic issue, the policy should focus on the ‘user’ rather than the ‘buyer’. Say, charge to those who are using the road during a jammed road/period. This can be done by technology nowadays.

I understand this is a more holistic issue over EV incentive. However, I would like to bring it out that FRT might not be a right policy to mitigate the traffic issue in HK.

I agree completely. Nothing else in HK is taxed to this extent (115%). The FRT tax is blatantly unfair on those who live in areas of HK not served by public transportation.

The issue with charging the user rather than the buyer is that by far the greatest users are the commercial fleets. These use the roads orders of magnitude more than private cars. That would be a politically dangerous approach for Government to take.

A fair/sensible approach to taxing for road upkeep would be to base it on number of axels and vehicle weight. Pollution tax should be based on pollution emitted. Congestion should be addressed by charging higher prices for access to congested areas. The imbalance at the cross-harbour tunnels should be addressed by fixing the toll disparity. Limiting car ownership can, in the long run, only be addressed by increasing the quality, and usability, of the public transportation alternatives. But, none of these fair/sensible approaches account for pressure from industry/trade groups, or the political situation.
 

hkskywalker

Member
Apr 5, 2017
8
0
Hong Kong
Support. Potential buyers of Tesla Model X (with HK$1 m budget) now have to buy very polluting BMW X5 and Benz SUVs now. The only ones who benefit are BMW and Benz gasoline burning cars.
 

Mille Pun

Member
Jun 21, 2015
135
7
HK
Such disappointed and hopeless on the new policy just announced. I’m gonna buy whatever the car that they approved and destroy it. And to get a model 3.
(Who in HK will buy a 2nd car if they are geneielly owning a car going to be destroy?)

And if I really own a car that going to be destroy, usually I’m a very budget owner. I definitely won’t go for a new car.

Can Tesla enter car destroy business in HK, and then offer the tax-reduced car for leasing?
 
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Mille Pun

Member
Jun 21, 2015
135
7
HK
6 years old car + 3 years ownership

Car must going to be destroyed. Does it make sense?

Selling a 6 years old mid level car can still get $100k+ , how much can one get if they destroy the car?
 

markwj

Moderator, Asia Pacific
Apr 10, 2011
4,603
1,218
Hong Kong
Here are the measures announced:

169. To improve roadside air quality and reduce air pollutant emissions in a sustained manner, we will continue to encourage walking and the use of public transport, and take forward other initiatives, such as promoting the use of electric vehicles. The current first registration tax (FRT) concessions for electric vehicles will cease on 31 March 2018. Taking into account factors such as the technological development and market situation of electric vehicles, road traffic conditions and views of stakeholders, the Government has decided to continue to waive in full the FRT for electric commercial vehicles, electric motor cycles and electric motor tricycles until 31 March 2021.

170. As for electric private cars, on the one hand, the Government has to contain the number of private cars to prevent traffic congestion and aggravation of roadside air pollution; on the other hand, we hope to encourage car owners to go for electric vehicles as far as possible. Hence, apart from continuing with the current FRT concession of up to $97,500, we will also launch a "one-for-one replacement" scheme from today to allow eligible private car owners who buy a new electric private car and scrap an eligible private car they own to enjoy a higher FRT concession of up to $250,000. The above concessions will remain in force until 31 March 2021. The Environmental Protection Department and Transport Department will announce the details later.

Details on the switcher program eligibility requirements are here:
Highlights:
  1. The “Old PC” must have been first registered in Hong Kong for at least 6 years.
  2. The vehicle owner participating in the application under the “One-for-One Replacement” Scheme must have been the registered owner of the “Old PC” for 3 years or more, without interruption, immediately prior to its de-registration.
  3. The “Old PC”, with or without interruption, must have been licensed for at least 20 months (i.e. 608 days or more), within the 24 months immediately before its de-registration.

Charged.HK will have a press release later, but here are the quick reaction comments:

  • We are pleased that the Government has made a three-year commitment which provides greater visibility to EV owners and the EV industry broadly.

  • We are also pleased that the government has adopted our recommendation to introduce a switcher program. However, the announced restrictions on that program seem too limiting. We believe that the switcher program should apply to everyone selling an existing vehicle and purchasing an EV.

  • The $97,500 cap has remained unchanged, despite the past year clearly showing it to be insufficient incentive to encourage more than a handful to purchase EVs.

  • Whilst we understand the desire to limit the growth of the private vehicle fleet, we respectfully point out that it would be more effective to limit the growth of the 99% that are petrol/diesel, without stunting the growth of the less than 1% that are Electric Vehicles.

  • Nothing has been announced to address the issues of public or home/workplace charging. No overall target for the banning of ICE vehicles has been announced.

  • In the 2014 Industry Study on Electric Vehicle Adoption in Hong Kong, the Hong Kong Productivity Council put forward 13 recommendations to support higher rates of EV adoption in Hong Kong. To date, none of those recommendations have been implemented by our government. According to the Hong Kong University school of Public Health, our air pollution annually results in 1,600+ premature deaths, 110,000+ 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.

  • Hong Kong desperately needs a holistic approach to manage the transition to Electric Vehicles and sustainable transportation. An approach that addresses not just the vehicles, but the charging networks and support infrastructure as well.
 

Captain_Kong

Member
Jul 4, 2014
170
23
HK
Shared the same view that the new EV policy is disappointing to say the least. Guess it'd help marginally potential Tesla customers in HK.

However, can Tesla supply HK "commercial" versions of MS and MX to take advantage of this new policy? Not sure what're the vehicle certification requirements, but Mercedes did sell, for example, military version of G-wagen in HK... so guess a case could be made to Elon / Tesla.
 

Mille Pun

Member
Jun 21, 2015
135
7
HK
Sorry I’m a nay sayers on HK gov, I think they are playing the number game. Offering an incentive plan man, but disconnect the demand and supply.

For people who got a 6 years old car, it is economically nonsense to destroy the car.

For people who got a really old car for more than 3 years, logically they will not spend hundred thousands to buy a new car.

With this in mind, I can’t see this incentive actually promoting people to switch to EV.

IMO, they should remove the 3 years ownership limitation if they geniusly want to promote EV.
For instance, even if I buy a old car and destroy it just to get the tax-credit. I’m literally destroyed an old gasoline car for HK, and why am I not getting the tax-credit?

With this process, it is transferring the tax-credit to someone who dun need, to someone who need, and to import a new EV to HK. And the total number of car remain unchanged. Why not?
 
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Captain_Kong

Member
Jul 4, 2014
170
23
HK
Sorry I’m a nay sayers on HK gov, I think they are playing the number game. Offering an incentive plan man, but disconnect the demand and supply.

For people who got a 6 years old car, it is economically nonsense to destroy the car.

For people who got a really old car for more than 3 years, logically they will not spend hundred thousands to buy a new car.

With this in mind, I can’t see this incentive actually promoting people to switch to EV.

IMO, they should remove the 3 years ownership limitation if they geniusly want to promote EV.
For instance, even if I buy a old car and destroy it just to get the tax-credit. I’m literally destroyed an old gasoline car for HK, and why am I not getting the tax-credit?

With this process, it is transferring the tax-credit to someone who dun need, to someone who need, and to import a new EV to HK. And the total number of car remain unchanged. Why not?

It's not a sensible policy in the first place given that HK follows market economy... having this ownership requirement simply creates a potential loophole which you've helpfully highlighted. As if you're not (or someone else) buying this 6-years old car, the car serves no purpose in HK and would be shipped to other regional RHD markets for sale in any event.

Ultimately, Bo Su is a "political puppet" to the big oils and ICE concessionaires' lobbying pressure. He has to appear to be doing something, without offending these stakeholders.
 

FequalsMA

Member
Mar 10, 2016
282
75
Hong Kong
Ultimately, Bo Su is a "political puppet" to the big oils and ICE concessionaires' lobbying pressure. He has to appear to be doing something, without offending these stakeholders.

I've come to terms that these backwater, money grubbing fuel pawns get to dictate policy for a while longer.

If they won't play nice then fine, the market will eventually transition to EV (behind everyone else in the world)
But don't try and come off as Asia's world city or whatever especially since even big brother to the north is wrecking us when it comes to ev adoption and infrastructure. Can't have it both ways.

The only thing i can't get over is how many years of life expectancy the general population needs to lose just cause some one wanted to pocket a few bucks by purposly impeeding EV adoption.



"In time, you will know what it's like to lose. To feel so desperately that you're right. Yet to fail all the same. Dread it. Run from it. Destiny still arrives." Thanos
 
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Captain_Kong

Member
Jul 4, 2014
170
23
HK
I've come to terms that these backwater, money grubbing fuel pawns get to dictate policy for a while longer.

If they won't play nice then fine, the market will eventually transition to EV (behind everyone else in the world)
But don't try and come off as Asia's world city or whatever especially since even big brother to the north is wrecking us when it comes to ev adoption and infrastructure. Can't have it both ways.

The only thing i can't get over is how many years of life expectancy the general population needs to lose just cause some one wanted to pocket a few bucks by purposly impeeding EV adoption.



"In time, you will know what it's like to lose. To feel so desperately that you're right. Yet to fail all the same. Dread it. Run from it. Destiny still arrives." Thanos

Do you (or we) genuinely think that for a finance secretary, who also runs a "sub-divided" flat business model in SSP on the side has the intellect to understand all this!?

He doesn't have the vision or guts as Elon for sure.
 

Mille Pun

Member
Jun 21, 2015
135
7
HK
Can gov provide stat for how many people who just destroyed their car (ppl usually re-sell it until the car cant run), would then buy a brand new car that worth more than 200K? (Above $200K price will then exceed the current tax-credit $95k)

I suspect this segment of people virtually not exist.

Together with NO mention to support charge infrastructure, NO mention to ban gasoline car in future. The message from Paul SUK is very clear. He is either a real genies, or a real IDIOT.

Indeed, i feel very depressed to have a government like this.....we know that, we all know that.
 

markwj

Moderator, Asia Pacific
Apr 10, 2011
4,603
1,218
Hong Kong
Given the discrepancy between the two FRT exemption caps (HK$250,000 - HK$97,500 = HK$152,500), and the relatively low vehicle ownership transfer fee (HK$1,000), the result is HK$150,000+ of incentive to game the system.

So, I agree with the comments that the stated purpose (an owner with an 15+ year old car ready to be scrapped can get the new HK$250,000 incentive for himself to buy a lovely brand new EV) is rubbish and almost nobody who drives a 15+ year old car ready to be scrapped is likely to be in the market for a brand new vehicle (EV or otherwise). However, given that HK$150,000+ is a lot of tax relief to just scrap with an old car, I do think a business will grow around this new incentive; second hand car dealers, scrap yards, lucky number businesses, and other middlemen, will step in to match scrappers to new buyers.
 

Mille Pun

Member
Jun 21, 2015
135
7
HK
Mark, agreed. I understand the tax-incentive is not transferred. However, the purchased new EV is certainly transferrable. Anyone who don’t mind to be the ‘2nd hand owner’ for a brand new vehicle would greatly be interested. It seems a matching for scraper and buyer is legit.

Controversially, it might be morally incorrect to do it and to game the system. But if I’m in the car business I will definitely do it provided that it does not violate any laws, as we cannot act morally to this $%^#$&*$%& government (sorry I dunno how to describe this government).
 
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gubes

Member
Mar 26, 2014
145
10
Hong Kong
I can see an arbitrage here. If you own a 6 year old cheap car and had it for 3 years, you go and buy a Tesla and get a 250k discount. Register the car, and then sell it immediately for its market price without driving a single kilometer and make a handsome profit.
 

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