With Incentives Removed, Electric Car Sales, Including Teslas, Come To Complete Halt In Hong Kong

2 days ago by Eric Loveday 25

Tesla Hong Kong

From hero to zero, in just one month.

Mr. JD Clayton, Property President of Studio City, and Miss Isabel Fan, Regional Director of Tesla Hong Kong, Macau and Taiwan, hosted the ribbon cutting ceremony.

Hong Kong has long been a hotbed for electric car sale, driven mostly by incentives, but what happens when those incentives vanish – almost doubling the cost of a new EV in some cases overnight? EV sales disappear….completely.

In March 2017, electric car sales in Hong Kong stood at 2,964 units. Come April, sales dropped to zero units. This was exactly as we had predicted when news first surfaced of the incentives being slashed.

As South China Morning Post explains:

“Since the April 1 introduction of the first registration tax on EVs, vehicle prices have shot up by 50 to 80 per cent, depending on the model, with tax relief now capped at HK$97,500. The impact has been immediate, and appears to have killed off the future of EVs in Hong Kong overnight.”

Transport Department figures indicate there is a total of 10,589 private EVs registered in the city, and 2,964 of them were registered in March 2017 alone. That healthy growth then hit a red light when not a single private EV was registered in April.”

“There was no first registration of an electric private car in April 2017,” a department spokesman confirms.”

Sales literally fell off a cliff and hit rock bottom.

Tesla

First pop up store to display a LHD Model X in Hong Kong – Oct 2016

This will impact Tesla the most.The March sales figures show that out of the 2,964 EVs registered that month, all but 20 were either the Model S or Model X.

Under the new layout, the price of the Model S soared from HK$570,000 to more than HK$900,000.

The idea of the new tax structure is to reduce congestion in the city. It’s been pointed out that most people in Hong Kong who own a Tesla also own several other cars. Hong Kong thought it wrong to subsidize what it refers to as car collections.

However, we should point out that there’s been no tax increase on the purchase of your first gas car in Hong Kong, though subsequent purchase of additional cars are taxed.

Edwin Lee King-yan, co-founder of Charged Hong Kong, commented on the situation:

“This is not about boys showing off with fast toys – there are other owners’ clubs more focused on that side of things.”

“…electric cars still only constitute about 1.3 per cent of all vehicles on the road in Hong Kong, so the impact on congestion by effectively halting sales will be negligible.”

“It’s 95 per cent Tesla – and it’s Tesla that has driven sales of EVs in Hong Kong by offering high performance, luxury and huge environmental benefits.”

Barring any changes to the new tax setup, Tesla sales will suffer significantly, as will the sales of the remaining automakers who contributed to the other ~20% of EV sales in Hong Kong.

Source: South China Morning Post

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25 responses to "With Incentives Removed, Electric Car Sales, Including Teslas, Come To Complete Halt In Hong Kong"

  1. EVA-01 says:

    Someone knowledgeable on the matter, please explain to me the situation in Hong Kong. What this incentive is that has been removed?

    1. YK says:

      In Hong Kong, purchasing every car needs to pay the First Registration Tax (FRT). The calculation is a bit complicated. Simply saying, the tax rate ranges from 40-115%, higher the value higher the rate. Therefore, more expensive Tesla cars’ prices are almost doubled. Before 1 April 2017, the FRT of all EVs was waived to promote EVs due to environmental concern.

      Frankly speaking, to reduce congestion is an excuse. The true reason is that the dominant power in the vehicle market, ICE car distributors, felt threatened and jealous of the blooming Tesla. They strenuously lobbied the powerful guys in the government where many people are not really environmental and have similar mindset as Trump!

  2. FISHEV says:

    Gets back to talk by Nissan’s Ghoson that incentives are needed to move from a cheap ICE cars to more expensive but necessary EV’s and other sustainable alternatives.

    Tesla claims it does not affect them (and being in a luxury market to high income demographic that is true to some extent) but Tesla just lost 3% of its total sales (3,000 out of 80,000 yearly sales) due to exactly what Ghosn stated.

    http://insideevs.com/ghosn-ev-sales-are-driven-by-mainly-state-and-company-incentives/

    We’ve seen it in Norway, US state of Georgia and now Hong Kong.

    There does not seem to be any move by GOP to kill the current EV Federal tax incentive but we do need the progressive states of the CARB alliance (the states who use CA’s strict emissions standards) to step up with matching tax credits.

    CA’s income limit is a good idea to focus the full credit effect on vehicles aimed at mass market vs. $100K luxury vehicles.

    1. Mikael says:

      Hong Kong is pretty different. Total car sales there is 30-40k, which means that 3k sales would be up to 10% of the TOTAL market.

      That is not normal in any way. Tesla is holding up well against ICE competition without incentives (but of course selling more with generous incentives and ICE disincentives).
      Tesla S/X sales will not be much impacted if marginal incentives like the federal credit in the US goes away.

      1. FISHEV says:

        But 2,000 HK sales are 3% of Tesla’s total world sales in 2016. So Tesla’s claim that it is unaffected by the EV incentives is proven wrong.

        1. JakeY says:

          It’s all relative. No EV will be 100% unaffected by removal of incentives, but Tesla is far less affected because rarely are incentives as big a percentage of the purchase as in this case (for example $7.5k US incentive is much lower).

          Also, the 3k registered before deadline is a bit misleading, as that is the rush of sales before deadline. Doesn’t mean they lost that many sales.

          1. FISHEV says:

            “Tesla is far less affected because rarely are incentives as big a percentage of the purchase as in this case ”

            Its more the income level of Tesla purchasers to date, to people with the disposable income to purchase $100,000 cars, the $7,500 is inconsequential.

            As you get into Leaf and Bolt territory, it is substantial amount relative to the person’s income.

            1. JakeY says:

              I disagree it’s mainly income, some people who previously owned a Prius also stretched for a Model S. The difference is the class (after incentive) that the car is put into.

              A Leaf with 7.5k is $23k, which is around mid-size economy car pricing, but without it at $30k it’s getting close to entry level premium compact (CLA, A3) prices. People might want an ICE car instead if it is that expensive.

              The Model S base price, with or without the incentive, is already purely in the premium mid-size class. The incentive doesn’t change the price class of the vehicle, so unless the car has merit in that price class, people wouldn’t have bought it in the first place.

              1. FISHEV says:

                Most people cannot afford a $100K Tesla which is the range for all Tesla’s sold to date. That is top 25% of people in the US using the 20% car expense rule.

                To those people, the $7,500 is less of an incentive. As income drops, the $7,500 becomes a greater incentive.

                At this point, Tesla would be little effected by the loss of incentives in the US. In Hong Kong, the effect was greater with almost zero sales when incentives were rescinded.

                Norway recently had to cut EV incentives so we’ll see how that plays out.

  3. DJ says:

    Wait, what? I thought, based on the claims of several posters here, that buyers aren’t even usually aware of the rebate. Hmm… seems that people are more knowledgeable that many people here think.

    When the incentives here in the US go away I don’t think it will come to a standstill but most people aren’t willing to payable lot of money for a car that can do less than it’s ICE counterpart so I would expect sales to be less than if the incentives were still there.

    1. FISHEV says:

      “I thought, based on the claims of several posters here, that buyers aren’t even usually aware of the rebate. ”

      And that is typically true as, to date, the income demographic for Teslas’s is people who can afford $100,000 cars. If they car is $93,000 vs. $100,000 that’s not an issue for that income demographic.

  4. John says:

    This is good. We must get rid of all types of cars.

    1. JIMJFOX says:

      John, you might as well try to ban sex!

  5. David Cary says:

    Everyone in HK probably knew the incentive was going away so they sold 1 year worth of cars in 1 month. Now expect 11 months of near zero sales. HK was Teslas number one market proportionally in the world by far compared to every month and every country in its history in March. Not normal.

    Charging nearly double for a car is not a normal incentive. It would be like selling the Model S in the US for $35k for the next 12 months and then looking at sales in July 2018 – which would be zero of course.

    1. Josh Bryant says:

      This, and only this. Check back on this market 1 – 2 years from now.

    2. peetah says:

      this is basically why sales are not that good in australia for tesla as well…

    3. arne-nl says:

      +1

      People knew this was coming and buying a car you do not in an impulse. So everyone in the market for an electric car already bought his/her in March. Same happened here in The Netherlands after the reduction of incentives. It will remain 0 for a few months, then sales will pick up again.

  6. JIMJFOX says:

    The World DESPERATELY needs a truly affordable EV. Until that happens, the ‘tipping point’ begins to look like the ‘edge of the cliff’…

    Batteries, batteries, batteries- or a far better substitute. That’s ALL that matters, really. Seems like trying to sell cars before the oil comes out of the ground.

    1. FISHEV says:

      “Batteries, batteries, batteries- or a far better substitute. That’s ALL that matters, really. Seems like trying to sell cars before the oil comes out of the ground.”

      We can’t wait for battery prices to come down as we need to be selling 100% EV/non-polluting vehicles by 2015 in order to have 100% non-polluting vehicles on the road by 2050. If we even have the short amount of time as green house gas emissions have accelerated global warming even faster than scientists have predicted.

      So we need government incentives to cover the cost differential and to add incentive to EV purchase as there are also the range and long recharge issues and problems with providing home charging in multi-family dwellings. So a $15,000 per car tax credit that can be applied over multiple years is needed.

      To pay for it, tax the cause of the problem to which EV’s are the solution, fossil fuels. In this case road fuels gasoline and Diesel.

      Disincentive to the problem source and incentive to the problem solution, good government policy.

      1. FISHEV says:

        That’s “be selling 100% EV/nonpolluting by 2035”.

  7. DC says:

    What HKG needs is tesla network consisting of privately owned Teslas. Only way to reduce congestion is to increase car utilization rate while reducing would-be new car owners need to own a car in HKG. For them to run on electricity is a big plus.

    1. FISHEV says:

      No. Mass transit is the answer in densely populated urban areas, preferable underground or overhead leaving the former streets to pedestrians and bicycles and green areas.

  8. Jason says:

    You can see the process. Governments make money off taxes. No tax EV replaces high fac taxed ICE, no income for government. Not going to last long, is it?
    GHG problem is caused by fossil fuels, so why is fossil fuel so cheap? Government is also in power because we vote them in, so rather than take the hard line and tax fossil fuel how it should be, they subsidise it instead.
    IMO the best way to promote EV would be to tax ICE car more. End of story. The current way really isn’t working fast enough.

  9. Ambulator says:

    “The March sales figures show that out of the 2,964 EVs registered that month, all but 20 were either the Model S or Model X.”

    So, 2,944 Teslas and 20 other. That’s just weird.

  10. Phil says:

    Imagine what would happened if the Oil Companies lost their government incentives.

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