Speech by Minister Ong Ye Kung: A New Drive

Joint segment on Sustainability at MSE's COS Debates 2021 – Speech by Mr Ong Ye Kung, Minister for Transport

A New Drive

1 Madam Chair, I will be talking about electric vehicles. Throughout my speech, I will refer to electric vehicles as EVs; and as for traditional vehicles running on fossil fuels through an internal combustion engine, I will refer to them as ICEs.

2 So let me start with Professor Koh Lian Pin's question, which is the net carbon savings due to transition from ICEs to EVs.

3 There is a net carbon abatement by switching from ICEs to EVs, even if the electricity is generated by fossil fuels. In Singapore, where most of our power is generated from natural gas, the net carbon savings by switching from ICEs to EVs is about 50%.

4 Today, vehicles, on aggregate, emit about 6.4 million tonnes of CO2-equivalent per year. If the subset of light vehicles all ran on electricity, the total net carbon abatement would be about 1.5 to two million tonnes of CO2-equivalent per year. This abatement is about 4% of our total annual emissions – not insignificant.

5 Hence, the Singapore Green Plan includes a push for EVs. We have a 2040 target to phase out ICEs and have all vehicles run on cleaner energy.

6 To realise this vision, and given that COEs for cars last for ten years, we will require, from 2030, all new car and taxi registrations to be of cleaner-energy models.

7 They can be electric, hybrid, hydrogen fuel cell cars, etc. As these technologies are evolving rapidly, we will monitor developments closely and finalise the definition of registrable models well before 2030.

8 To further pave the way for greener vehicles, we will also cease new diesel car and taxi registrations from 2025. As we know, diesel cars emit PM2.5; they are even more pollutive.

9 Several members have asked what steps will be taken to encourage the take up of EVs in Singapore and meet these 2030 and 2040 targets. Some members have asked whether there are further interim targets. We used to have a 2040 target, we just set a 2030 target, so give us some time. And as we gather momentum, maybe we can have more interim targets. For now, it's just these two. I think three aspects will make a difference – taxes, regulations and chargers. Let me talk about them in turn.

Taxes for Electric Cars

10 First, vehicle taxes.

11 The objectives of the COE system and upfront vehicle ownership taxes such as the ARF (or Additional Registration Fee), are mostly to manage congestion, to which there is no difference between ICEs and EVs. Therefore, it is not appropriate to waive all or almost all taxes on electric cars, as suggested by Dr Lim Wee Kiak, Mr Ang Wei Neng and Mr Lim Biow Chuan.

12 Technological advancement is narrowing the price differential between ICEs and EVs rapidly. Experts think price equalisation will happen in 2025 or earlier. To give members an illustration, the main cost of an EV is in the battery – in 2010, the cost was about US$1,000/kWh. Now, it is about US$140/kWh. So in 10 years, it fell from $1,000/kWh to about $140kW/h. And experts feel that about $100/kWh is the tipping point, where there will be price equalisation between EVs and ICEs. In the meantime, we will offer tax incentives to EV owners.

13 We introduced the EV Early Adoption Incentive this year. Together with the enhanced Vehicular Emissions Scheme, the cost of owning an electric car can be lowered by up to $45,000.

14 Since the start of the year, there have been about 100 new electric car registrations - . small number, but we will ramp it up.

15 Many mass-market electric car buyers still cannot benefit from the full $45,000 rebate, because there is a minimum payment of $5,000 for the ARF.

16 To enable mass-market electric cars to benefit from the full rebate, we will remove the $5,000 minimum ARF.

17 As for road tax, it is a more complicated matter. We just implemented a significant downward revision for electric cars from 1 January this year. For certain models, the reduction is significant, as much as 40%.

18 Notwithstanding this, we decided to review the matter further. Let me explain why.

19 A large part of road tax is a luxury tax. But luxury is subjective and hard to measure, so for a long time we have been using engine capacity as a proxy for luxury. The bigger the engine, the bigger the car, the higher the road tax.

20 The same approach can be applied to electric cars. They do not have engine capacity, but we can design the road tax schedule based on propulsion power, measured in kilowatts, as a proxy for luxury.

21 Then we should set the electric car road tax schedule such that electric and ICE cars with roughly the same look, feel and level of luxury are subject to the same road taxes. This is inherently a subjective exercise and won't be very scientific, but it reflects the policy objective, which is that a large part of road tax is a luxury tax.

22 If we take that approach and then eyeball through the models of ICE and electric cars using their prevailing road tax schedules, we find that for the small and medium electric and ICE cars, their road taxes are still quite comparable. But for the larger cars, they are a little bit off.

23 To illustrate, let's compare a 105kW MG ZS EV, that is the most popular EV in Singapore now, and a 1,800cc Renault Megane. Both are medium-sized family cars; both are subject to similar annual road taxes of around $1,000.

24 But for the slightly larger, mass-market segment cars, it becomes a bit off. To illustrate again, a 150kW Hyundai Kona Electric SUV is subject to about the same road tax as a 2,000cc Audi Q5 or Q7. But I think members will agree with me that the level of luxury between the two models is quite different, but with the same road tax.

25 Similarly, an entry-level Tesla model, which is the 225kW Tesla Model 3, and a 3,000cc Porsche Cayenne, are subject to about the same road tax – also a little bit off.

26 This problem exists because we have thus far linked the road tax schedules of electric and ICE cars by propulsion power. So it is quite scientific, and hence, we have inadvertently penalised the more power-efficient electric cars.

27 To address this, we will adjust the road taxes further for electric cars in the 90-230kW band. With your permission, Madam Chair, may I ask the Clerks to distribute a handout showing the current and new electric car road tax schedules?

28 We will merge the current electric car road tax bands of 30-90kW and 90-230kW into one band and subject them to the current road tax formula of the lower band, i.e. the 30-90kW band.

29 The long and short of it is, we will bring down the road taxes of electric cars in the upper band. Using the examples earlier, a Hyundai Kona Electric will see its annual road tax fall from about $1,400 to $1,100; that of the Tesla Model 3 will drop from $2,300 to $1,500. This will make their road taxes comparable to ICE models with a similar look and feel.

30 Some car enthusiasts have observed that for big electric cars, those with 230kW, 300kW, the road tax schedule is also a bit off. To illustrate, some have told me, an electric Porsche Taycan is subject to significantly more road tax than a Porsche Cayenne.

31 I acknowledge the concerns. But these are all big luxurious cars, and I prefer to leave them alone for now.

32 What is important is that we have now established the principles and policy for charging road tax on electric cars. As more models emerge, we will review the road tax schedule further, with a view not to over-charge electric cars vis-à-vis ICE cars.

Regulations and Standards

33 The second area of work is to improve our regulations and standards. With your permission, Madam Chair, may I show an illustrative slide on the LCD screens please?

34 Members may be wondering what these are. These are not the latest emojis;. they are different kinds of plugs for EVs used around the world.

35 We have settled on two of these plugs, Type 2 (for AC charging) and CCS 2 (for DC charging). These are the most widely adopted around the industry, and we will adopt these as our national public charging standards.

36 The set of technical standards and safety precautions that govern the EV charging system in Singapore is called the TR25 (or Technical Reference 25). It is administered by the EMA or Energy Market Authority.

37 To give dedicated focus to this work, we will amend legislation to transfer the role of regulator of EV charging systems from EMA to LTA.

38 LTA is also leading a comprehensive review of TR25 in partnership with industry players and various stakeholders and experts. We expect the review to be completed by end of this year. The idea is to make TR25 friendly to industry development, while ensuring safety.

39 While the review is ongoing, LTA plans to set up regulatory sandboxes for commercial players to test and introduce new charging solutions. It is very important that we get this right, because it will determine the level of private sector involvement in finding solutions to build up the infrastructure, as well as drive EV charging and adoption.

40 A couple of members also raised the issue of disposal and recycling of used EV batteries. These come under the regulation of NEA, and will be addressed at the MSE COS speeches later.

National EV Charger Network

41 This leads us to the third point, which is how to expand the EV charging network, and is a point raised by several members.

42 We are doubling our 2030 target, from 28,000 to 60,000 charging points. This comprises 40,000 in public carparks and 20,000 in private premises. If we assume one-third of our cars are EVs by 2030, this translates to an EV to charging point ratio of about 5:1.

43 This ratio is better than many public estimates of the optimum ratio, which ranges from 10:1 to 5:1.

44 The key to unlocking more charging facilities, is not to insist on high-powered, or 'fast' charging.

45 Because that would require a major upgrading of almost all the power substations and grid infrastructure all over Singapore, as envisaged and raised by many members.

46 It would be costly, time-consuming, stall the development and expansion of charging infrastructure, and severely impede the adoption of EVs.

47 I understand why members like Mr Ang Wei Neng want charging to be faster. Given a choice, I think we all want charging to be faster, but the cost will be immense. I think for most drivers, the deterrent to switch to EVs for now is the sheer lack of charging points.

48 We can move much faster in making charging points available, if we accept that for most users, instead of high-powered or 'fast' charging, 'slow' or 'overnight' charging is actually alright.

49 In US, Europe and Japan, EV users predominantly use slow charging, with fast charging, defined as 22kW and above, estimated to account for 10-20% of charging demand.

50 So this requires drivers to change their habits. Drivers are used to a very quick visit to the petrol kiosks, pump petrol, buy a drink and go. So a mindset shift is required. After all, we are used to patiently charging all our electronic devices, whether they are smart phones, smart watches or laptops, while we sleep, or while we are in office doing work. It will be the same for EVs.

51 For this mindset shift to happen, we will need to make chargers available and accessible. The average electric car now has a typical range of 400-500km, but it is increasing. That requires a typical user to fully charge about once every five days. Not every day, but once every five days.

52 Charging points will need to be shared, with different drivers charging on different days and at different times, especially in public car parks.

53 That way, we will be able to minimise electrical infrastructure upgrades. We can tap on the spare electrical capacity in all our public carparks, and install charging points as quickly as possible.

54 Where the infrastructure supports it, or where we decide to selectively upgrade the infrastructure, fast chargers can then be installed. Today, we can already find fast chargers in certain petrol kiosks, shopping malls, industrial and commercial premises.

55 As for fleet operators, point-to-point operators for example, and in response to Mr Xie Yao Quan, about 60% of our taxis are already petrol-hybrids. Our car fleet operators are committed to 100% cleaner energy fleets by 2040.

56 Unlike typical car users, fleet operators will need fast charging in order to support their business operations. Mr Ang Wei Neng mentioned charging farms. It's not far-fetched. These are issues the Government and fleet operators will need to sit down, discuss and try to work out.

57 But let me say this: fleet operators will need to be prepared to invest in building up the infrastructure to support their operations. They can amortise the investments over many vehicles, over many years of operations. Cost of electricity will very likely still work out much cheaper than petrol or diesel now.

58 Now how do we go about installing charging points? Where do we start?

59 As Mr Lim Biow Chuan and Mr Xie Yao Quan suggested, we plan to make it mandatory for car parks in HDB towns, private residences like condominiums and commercial buildings – to cater sufficient electrical capacity to support EV charging, and ensure that a minimum number of charging points is installed. But – it's a big "but" – we can only do this for new developments, or buildings undergoing major re-development.

60 As for existing car parks, if they are in public housing estates, public sector agencies, such as HDB or URA, will drive the installation. We will implement these in phased packages, well-spread across the island, and we will take a town-centric approach.

61 We aim to have eight "EV-Ready Towns" by 2025, where every HDB carpark in these towns will be fitted with charging points. They are, in alphabetical order, Ang Mo Kio, Bedok, Choa Chu Kang, Jurong West, Punggol, Queenstown, Sembawang, and Tengah.

62 By the 2030s, we will strive to make every HDB town an EV-Ready Town.

63 For non-landed private residences, such as condominiums, we will introduce an EV Common Charger Grant to catalyse implementation. This is part of the $30 million allocation announced in the Budget, to kickstart the build-up of EV charging infrastructure.

64 Non-landed private residences will be able to apply for the Grant to defray part of the cost of installing a charger, subject to a quantum cap per charger. This will be made available to the first 2,000 chargers installed from July 2021. LTA will release more details.

65 But there is another practical problem which Mr Lim Biow Chuan has mentioned. To install charging points in condominiums, the management corporations will need to convene general meetings and seek approval, which may not be forthcoming even with the grant.

66 The private sector can provide a solution. There are already a number of EV charging players, such as SP Mobility, Greenlots, and Charge+, some of which are prepared to undertake all the upfront installation cost, in return for a period where they can collect charging revenue. So the right tender specifications and commercial model can get this going.

67 Today, several of such projects already exist. They price charging at about 39 to 50 cents per kilowatt hour. This covers the cost of electricity, grid charges, installation cost plus their margins. What does this translate into? 39 to 50 cents per kilowatt hour translates to about seven to nine cents per km travelled, which I think is competitive and attractive.

Conclusion

68 Madam Chair, I just outlined the key steps we will take to drive EV adoption.

69 In many countries, inter-city driving is common, and that caused a lot of anxieties amongst EV users because they are afraid of battery depletion. If in the middle of the highway, you run out of battery, you are in trouble. But with our urban environment, Singapore is quite ideal as a testbed for the rapid adoption of EVs.

70 We can be at the forefront of this technology, to advance this significant thrust of the Singapore Green Plan. Thank you, Madam Chair.