Can Electric Vehicles be the springboard for a more sustainable future in Singapore?

Research Analysts: Shaun Ng & Cliff Ng

Research Head: Bharat (Dan) Gangwani

Region Head: (Uday) Sasthaa Gingee Babu

Abstract

In this article, we take a look at the electric vehicle market in Singapore. We start by discussing the general view of electric vehicles (EVs) in the past and how the outlook has evolved over time to what it is right now. This will be followed by the economic impacts that EVs will have on the economy and a conclusion where we suggest what Singapore can do to achieve its sustainability goals.

New Beginnings

Sustainable development has been a foundation to Singapore’s policymaking, effectively adopting a Whole-of-Government (WOG) approach to ensure congruence with the United Nations Sustainable Development Goals (SDGs). Currently, transport represents 14% of total emissions in Singapore (Climate Action Tracker, 2020). Besides the countless measures taken by the Singapore Government to reduce the number of cars on the road, an alternative to the pressing carbon problem is Electric Vehicles.

Singapore’s Relationship with Electric Vehicles

In 2018, Tesla CEO Elon Musk criticised the Singapore Government for being uninviting to Electric Vehicles (EVs). To date, EVs make up less than 0.2% of the total car population in Singapore (See, 2020). The problem persists with the lack of charging infrastructure in HDB car parks and public places. The public resistance to purchasing EVs may stem from functionality.

Range anxiety is one of the factors that contributes to consumer resistance. Charging capacity of EV batteries remains limited compared to the distance capacity of gasoline-powered vehicles. Presently, there are 1,600 charging stations in Singapore, with a limited capacity of one car at a time (Chan, 2021). Singapore has a small land area of 719 square kilometres (A. Ananthalakshmi, 2015), supposedly mitigating any potential range anxiety consumers would face. However, Nigel Yong, deputy editor of SGCarMart.com, explained: “The biggest challenge to electric car ownership in Singapore is access to a private charger, which might be the case for many Singaporeans who do not live in landed properties.” (Sregantan, 2018). While private firms like Greenlots and SP Group can help install more charging points, the government has a huge part to play in encouraging the installation of charging points.

To compare the costs of owning EVs and Internal Combustion Engine Vehicles (ICEVs), a “Cost-Effectiveness Analysis of Electric Vehicles in Singapore” was conducted by Kah-Hung Yuen (The Singapore Economic Review, Vol. 63, 2016). The paper concluded that Battery-Electric Vehicles (BEVs) in Singapore is highly improbable, because of the higher social and private costs. The social cost and private cost difference between BEVs and gasoline cars depicted the significant advantage gasoline cars have in Singapore, considering its lower open market value (OMV).

Turning the Tides

This is not to say that Singapore has not been edging towards EV adoption. Chair of the sustainable infrastructure committee under the Sustainable Energy Association of Singapore, Dr Sanjay Kuttan, believes that the rising urgency to combat climate change and improving air quality has really incentivised EV adoption to surge in Singapore (See, 2020).

To tackle the problem of high upfront costs faced by individual car owners, and the road congestion issue during peak hours, BlueSG was launched in 2017, in response to a Request for Information (RFI) issued by the Land Transport Authority of Singapore (LTA). On top of this, the public transport sector deployed “the first 10 fully electric double-decker buses” (Yong, 2020). This will be followed by 60 fully electric buses from LTA by 2021, reducing CO2 emissions by close to 8,000 tonnes a year (Yong, 2020), effectively decreasing pollution and improving air quality for Singapore.

Towards achieving sustainable development as a competitive advantage in Singapore, the Singapore Green Plan 2030 (Green Plan) was rolled out, a few days before Singapore Budget 2021 was delivered. The Green Plan laid out concrete targets for Singapore over the next 10 years, aimed at strengthening Singapore’s commitments under the UN’s 2030 Sustainable Development Agenda and the Paris Agreement. The goal in mind was to achieve net zero emissions as soon as they can. Among the 5 pillars laid out as the foundations for this plan, “Energy Reset” paid particular attention to shifting Singapore to a full EV country. The 2040 vision stated the aim to phase out all ICEVs, requiring all newly registered cars to be cleaner-energy models from 2030. Laying the groundworks of this, Singapore has doubled their EV charging point target from 28,000 charging stations to 60,000 by 2030.

Singapore Budget 2021 recognised that the country is going car-lite, and will further reduce emissions by switching to cleaner-energy vehicles – stating that “EVs are the most promising clean-energy vehicle technology today”. One tangible measure taken by the government is setting aside $30 million over the next five years for EV-related initiatives, such as improving charging infrastructure across private spaces. Tackling the problems of EV adoption mentioned by Yuen, Singapore will decrease the cost differential between EVs and ICEs by lowering Additional Registration Fee (ARF) to zero for EVs, offer rebates for EV adopters, and discourage ICEs by imposing heavier duties on diesel and petroleum.

Economic Impacts

The switch to EVs will have a positive impact on Singapore’s GDP in the near future. Even though EVs have a larger upfront cost, the GDP from the sales of EVs leak overseas as Singapore imports most of its vehicles. This will hold true until 2022, when Hyundai’s $400million EV plant in Jurong Innovation District commences its operations (TodayOnline, 2020). Hyundai plans to produce 30,000 vehicles per year by 2025 (TodayOnline, 2020), being the first to contribute to Singapore’s GDP through car manufacturing. However, maintenance of an EV costs approximately $1300 cheaper over a 5-year period compared to an ICEV (NBCnews, 2019), because there are fewer moving parts, which reduces wear and tear (Kia, n.d). Lower maintenance cost works against the positive effects EVs bring to Singapore’s GDP.

Concrete plans such as the Green Plan, aimed to install 60,000 charging points to encourage adopting EVs in Singapore. Installation of said charging points are costly and they pile on to the positive effects of GDP either through government expenditure or investments by private firms such as Greenlots and SP Group.

A full paradigm shift to EVs could also threaten employment levels in Singapore. The largely automated processes of an EV means fewer parts, and fewer labour required. A typical ICE vehicle requires 6.2 man hours on average while an EV cuts that number down to only 3.7 man hours (NBCnews, 2019). Furthermore, most traditional car manufacturers produce their own internal combustion engines, but EV automakers generally farm out their battery and battery packs to a handful of global suppliers (NBCnews, 2019). This would mean that EV factories, such as Hyundai’s EV plant in Jurong would require fewer workers than a traditional car factory. Employment in the Transportations and Storage sector make up 10% of the workforce in SG (Singstats, n.d.). It is noteworthy that the lower revenue levels of auto repair shops coupled with the fall in demand for manpower can lead to a layoff pattern in the Transportations and Storage sector and potentially affect employment levels in Singapore.

Transport is responsible for a considerable portion of the total greenhouse gas emissions in Singapore. EVs are the next step to a greener environment in Singapore as they have the potential to achieve 0% emissions (Energy.gov, n.d) as long as the origins of electricity is fully renewable. In the green plan, Singapore is working toward installing solar energy on the rooftops of HDBs. This brings EVs in Singapore closer to achieving 0% emission and reduces the 14% of the total emission.

Moving Forward

In conclusion, EVs can benefit Singapore economically. Singapore might experience an increase in unemployment due to the layoffs in the transport sector, but this can be mitigated through programmes such as Skills Future. Besides the installation of charging points to encourage EV adoption, the Singapore government can also implement tax reliefs for EV owners. This contradicts the high tax imposed on potential car owners discouraging the ownership of a private vehicle in Singapore. Therefore, private EVs are only a temporary relief in reducing carbon emission. Singapore’s ultimate goal can be fully electrifying the public transport system, effectively aligning with the aim of reducing the number of cars on the road.

References

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