Latest revisions to the Government's electric vehicle "one-for-one" replacement scheme

On 28 February 2018, the government launched the "One for One Replacement" Schemeto encourage owners of private cars to switch to electric vehicles, without stimulating the overall motor population. Drivers who scrap a gasoline-powered car and purchase a new electric car are eligible for a tax concession of up to HK$250,000 if they meet the following three conditions:

(i) The old private car must have been first registered in Hong Kong for at least 6 years when its registration is canceled owing to scrapping;

(ii) The vehicle owner participating in the application under the "One for One Replacement" Scheme must have been the registered owner of the old private car for three years or more, without interruption;

(iii) The old private car, with or without interruption, must have been licensed for at least 20 months (or 608 days) within the 24 months immediately before its de-registration.

The government aims to have electric or hybrid cars make up 30 percent of all private cars in Hong Kong by 2020. However, as of last month, statistics show there were just 10,670 licensed electric private cars, comprising 1.89% of the total 565,213 private cars in the city.

Based on documents submitted to the Legco by authorities, the number of private EVs registered for the first time between March and December last year was 454, of which only 321 have benefited from the scheme, or 32 a month on average.

Due to the factors stated above, the scheme has been criticized as ineffective and unconvincing. And yesterday, the government has relaxed the criteria for private car owners to participate in the scheme.

Under the new rules of the “One for One Replacement” scheme, the government has relented on two of the three above-mentioned requirements:

(i) The requirement for the car to be registered for at least six years remains unchanged.

(ii) Applicants are now only required to have been the registered owner of an old car for 18 months or more, instead of three years or more.

(iii) The old car only needs to have been licensed for at least 10 months within 12 months before its de-registration.

The amendment is effective until March 31, 2021, when the scheme ends.

According to government officials, the rationale behind these conditions is to avoid drivers purchasing very old second-hand cars and changing them to electric cars to enjoy the concession. However, while this sort of trade-in is indeed feasible and possible, electric car owners doubt if anyone will do it since it will be extremely troublesome and involve the additional costs of purchasing a second-hand car and the parking fee. Therefore, they have urged the government to scrap the requirements altogether.

While the policy amendment is welcomed by many electric vehicle owners, it is still not enough to promote the growth of electric cars in Hong Kong for the below reasons:

Price

Electric vehicles are fundamentally much more expensive than traditional cars, including the cost of the car itself, battery, insurance (our previous article has covered the reasons for rising premiums), and maintenance fees. The progressive first registration tax (FRT), which can be as high as 115%, further widens the gap between electric vehicles and petrol cars. You can see more information on FRT in our previous article.

While it may not be necessary to waive the first registration tax entirely, the government could increase the extent of concession so that the price of electric cars will be similar to that of a traditional fuel-powered car.

Charging stations

According to the government, there were 2,166 public chargers in the city last December, but non-electric cars often parked in them. The lack of charging stations is another big deterrent to electric vehicles.

While new buildings are required to install chargers for electric vehicles in their car parks, there are no such requirements for existing buildings. Therefore, the government can consider requiring these facilities to have charging stations in place. They may also legislate to allow people to install their charging devices in their own parking space.

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