Hong Kong suffers from high levels of air pollution, and as such, measures were put in place as part of the Hong Kong government’s efforts to reduce air pollution in the city in the form of new-vehicle registration tax waivers for electric cars. However, that privilege was reduced to only an HK$97,000 tax reduction, making buying a new e-car less incentivized from 2017 onward. Furthermore, in order to enjoy a higher tax break of up to HK$250,000 on a new electric car, people now need to trade in their old car first.
Tesla insurance premiums increase
Another reason for a decrease in Tesla sales in Hong Kong is the insurance premiums on Tesla cars. Every car owner who has ever looked for motor insurance in Hong Kong knows that the car make and car value has an impact on overall car insurance price. Tesla is classified as a luxury, electric, and sports car all at once, which automatically inflates the premium substantially. In the case of Teslas, however, what has led to a premiums increase of 3 times the previous year’s quote recently are high repair costs and claim frequency.
High costs of Tesla car repairs
As covered in one of our previous articles, Tesla’s appointed service centres and repair shops are driving up prices, as there are only a few of them in the entire city. Without a healthy dose of market competition, prices for minor repairs can go up multiple times more than for another car of similar value.
High claim frequency
Insurers who are now doubling or even tripling insurance premiums for Tesla cars state that in the previous years, not only did they receive higher than market value claim amounts, but also an unusually high frequency of claims had been submitted. This is perhaps due to Tesla car owners, due to the high costs of the car repairs, filing insurance claims more often, even for smaller repairs.
Another reason behind the high claim frequency is that Tesla’s engines accelerate very quickly - faster than diesel or petrol engines, possibly increasing the number of small collisions on roads or while parking, and hence, cosmetic repair claims increased.
Continue reading: Tesla's insurance costs, maintenance costs, and charging stations distribution
