High petrol and COE costs make up the “perfect storm”, further pushing S’pore’s EV figures

Disclaimer: Opinions expressed below belong solely to the author.

The Singapore government has outlined its goal to phase out Internal Combustion Engine Vehicles (ICEVs) by 2040.

In line with this goal, it has rolled out a host of incentives to encourage EV adoption, including rebates and subsidies.

Last month in June, Transport Minister S Iswaran announced that the take-up rate for EVs has seen marked improvement when compared to previous years — 8.4 per cent of new vehicles registered were EVs, which was double than 2021 figures.

What caused this sudden surge of EV adoption, seeing that the government policies have already in place for some time?

Energy costs have been rising

For one, high petrol costs may be playing a role in understanding the rising popularity of EVs.

As a major supplier of oil and natural gas, sanctions on Russia and a ban on purchasing Russian oil and natural gas has caused a drop in supply, and accelerated the rising costs of energy. After all, Russia produces 12 per cent of the world’s crude oil and 18 per cent of the world’s natural gas.

Petrol prices have been increasing sharply ever since the Russian invasion of Ukraine in January.

On top of this, the petroleum industry was just recovering from record-low prices in crude oil, which may also contribute to the perception that ICEVs are increasingly expensive to maintain.

In contrast, electricity prices have not seen a similarly steep increase.

Comparing the period between October 2021 and March 2022, petrol prices have risen an eye-watering 20 per cent. On the other hand, electricity prices have only increased at a modest five per cent — a far more manageable rate.

Taking these into consideration, EVs are now much more economical.

Since refuelling an EV means charging it with electricity rather than heading to a petrol kiosk and paying astronomical amounts of money for a full tank, Singaporeans may be incentivised to opt for EVs. This will save them from skyrocketing petrol prices in the long run, even though the EV itself may come at a premium right now.

These savings are considerably significant, estimated at around S$15,000 every year. Clearly, making the switch to an EV as soon as possible would be incredibly worth it in the long run, especially if consumers can afford the initial EV purchase without breaking the bank.

To buy or not to buy?

But whether or not Singaporeans can buy EVs raises the other issue. In Singapore, one needs to successfully bid for a Certificate of Entitlement (COE) before they can purchase a car. And right now, COE prices are at an all-time high.

Are Singaporeans really interested in buying a car, when COEs are costing upwards of S$110,000?

As it turns out, whether one hopes to get an ICEV or an EV, a COE is still required. So no matter which car one eventually purchases, the COE price is still going to cost a significant amount. 

The government has also been throwing some carrots into the ring — anyone that purchases an EV will be eligible for rebates when they register the car. This can be quite significant, costing up to S$45,000. 

Since such rebates are available only when one registers an EV, it will defray the high upfront costs of COE and a new car, and can serve to encourage EV adoption. At an estimated 11 per cent of the cost, these rebates can go some way to explaining why EVs are seeing a sudden uptake.

In addition, we should not forget that this discount can amount to large sums of money, especially for businesses in Singapore that rely on large vehicle fleets. Car rental companies, taxi companies, and the likes, can see huge savings when they purchase EVs.

This can happen when businesses expand their fleets to include more EVs, or even when they phase out their ICEVs as the COEs for these vehicles expire, and replace them with EVs.

Of the nearly one million vehicles in Singapore, more than 600,000 are private and rental cars, including those used by ride-hailing services such as Grab. This is a large proportion of cars that can potentially be swapped to EVs, if they are not already EVs.

With COEs at an all-time high, it can be a good time for these companies to make the switch — the rebates are only for early adopters of EVs, so they may not be up for grabs forever.

Charging up Singapore’s EVs

That being said, a common concern of EV owners has always been infrastructure. Uptake of EVs is slow in the US despite low prices simply because of the lack of EV infrastructure.

So how is the EV infrastructure like in Singapore?

It is safe to say that among all the initiatives that the government is putting out to increase EV adoption, the initiative to increase Singapore’s EV infrastructure is possibly its most important. Without the infrastructure to support EV usage, EV drivers can quickly find that it is pointless to own an EV in Singapore.

Charging infrastructure matters because it means that EV drivers can drive around without having to worry too much about the remaining range for the vehicle. Petrol kiosks are often easily accessible, so ICEVs already have the infrastructure to make them viable.

At the same time, EV charging infrastructure is not as widespread — carparks often only feature a few charging ports, and if EVs are to become commonplace, then EV charging infrastructure must support such an increase.

The government has mandated the standardisation of EV charging ports, meaning that EVs in Singapore will be able to charge at all public EV stations. With these initiatives, it may convince anyone who is on the fence about switching to an EV that any excess cost in convenience will be resolved in the near future.

For businesses, the incentive is even greater.

Fleets of vehicles will require EV chargers in any case, and businesses will likely need to invest in charging infrastructure for their own fleets. At the same time, this represents a potential business opportunity for them too. Since Singapore is still relatively underserved in terms of EV charging infrastructure, there may be profit to be made by these businesses.

There are already several businesses in Singapore that are providing charging infrastructure and banking on EVs becoming more mainstream.

Borneo Motors Singapore and SP Group recently secured a long-term partnership to develop EV sharing and leasing for Tengah, and companies like Charge+ are already constructing EV charging stations across Singapore.

There are even cross-border initiatives like City Energy’s EV charging service Go, in partnership with Malaysia’s EV Connection Sdn Bhd.

On top of this, another startup, Beep, has piloted Voltality, in order to standardise and streamline payments for EV charging in Singapore.

With so many companies providing charging infrastructure and support for EVs in Singapore, it is no wonder that many in Singapore are making the switch.

As Singaporeans complain about rising inflation and high COE prices, EVs seem to be mounting an offensive of their own and taking over the local market.

While the proportion of EVs registered on the roads seem small now, we must be aware that the transition is not in full swing yet. EV infrastructure is still being built, and they are still being developed and deployed to Singapore.

Currently, almost a tenth of new car registrations in Singapore are EVs, and this figure is expected to increase, making EVs a dominant force on the road soon. It looks like the government policy, entrepreneurs, and foreign events have all accelerated the rise of EVs in Singapore, and paved the way towards electrifying vehicles in Singapore.

Featured Image Credit: CarBuyer Singapore