Tesla Tells Hong Kong To Promote Electric Cars Or Its Pulling Out

Tesla

FEB 6 2018 BY STEVEN LOVEDAY 43

Tesla

Tesla Model X Launch In Hong Kong – Image Via South China Morning Post

Hong Kong was set to be a global leader for electric vehicles, but Tesla may pull out if policies don’t change.

We hear continued talk about China being the biggest automotive market in the world and the “place to be” when it comes to electric car manufacturers. However, as we previously reported, there are many issues making it difficult for electric vehicle makers to succeed in the region.

Last year, Hong Kong removed full registration tax incentives for EVs, which forced prices to skyrocket as much as 80 percent. There’s also a cap involved that allows for only so much support for electric car buyers. Both are impacting companies like Tesla significantly and EV sales have tanked as a result.

Tesla

Tesla Hong Kong Service Center

The very first month after the incentives were eliminated (April 2017), not a single new EV was registered in Hong Kong. For the rest of the year, Hong Kong saw only 99 new registrations, compared to the 2,078 from the same time period in 2016. Tesla only sold 32 vehicles during those months. Conversely, in March, just prior to the new legislation, buyers raced to get into new EVs, with a total of 2,939 deliveries.

The South China Morning Post reported:

“Scaling down Tesla’s operation in Hong Kong is a natural and logical consequence if the number of customers has dwindled prompted by a reduction of government incentives. Without government support, who is ­willing to invest in green technology?” 

Hong Kong officials claim that the EV credit was removed mostly due to its benefit being limited to upper-class consumers, as well as growing traffic congestion in the area. Last year, prior to the elimination of the incentive, there were 10,589 electric cars registered in Hong Kong, most of which were Telsa Model S and X vehicles. Essentially, the Silicon Valley automaker was becoming too popular in Hong Kong, and too many Tesla vehicles were being sold in the area. The Post continued:

“The sale of Tesla cars in one month was equal to the annual sales figure of some petrol car brands. They all complained that the rapid growth of Tesla these few years had made their lives really difficult.”

Tesla CEO Elon Musk has previously referred to Hong Kong as a “beacon city” for EV adoption, but now, it seems the opposite is true. The Post reached out to Tesla for comment. The automaker replied:

“We remain hopeful that the government will continue to encourage more electric vehicles on the road and preserve Hong Kong’s lead in clean, sustainable living.”

Source: South China Morning Post, Teslarati

Categories: Tesla

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43 Comments on "Tesla Tells Hong Kong To Promote Electric Cars Or Its Pulling Out"

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Robb Stark

Did Tesla threaten to pull out or simply reduce its presence?

WadeTyhon

Well Tesla’s presence (actually, all EV presence) has apparantly been reduced to nothing already.

The only way it could be reduced further is to pull out completely.

VoltNow

From the looks of it, they are already naturally out. Sort of an idle threat.

Steve

Haha, they weren’t picked to play so they are threatening to go home. Classic.

pjwood1

Not so simple, Steve. First, we have more polar media saying, “Without government support, who is ­willing to invest in green technology?”

That’s nonsense, and was followed by the usual culprit claiming Tesla’s market share was growing too fast. This is about policy. I bet Hong Kong has some of the worst city traffic, perfect for EVs. If the policy is electrification, and PHEV or cheaper BEV incentives lead to more ICE-to-electric miles, than by all means they should reassign the incentives to effect the policy.

Point being, people pay up for Green. Otherwise, there wouldn’t have monkeyed with “Clean Diesel”.

pjwood1

…otherwise, they…

earl colby pottinger

Yea, but people loved Tesla instead of the Chinese ICE and BEV cars.

And that is probably what the Chinese government did not like, Hong Kong people preferring a foreign car instead of local designs that the Chinese government thought their program would make attractive.

Dan

Hong Kong realized that EV incentives primarily go to upper class residents and that car ownership was contributing to congestion. I.e. they are spending more on mass transit and non automobile based transportation.

Looks like a more evolved position with greater potential for reduction of CO2 than what Tesla is demanding.

What’s the issue here?

SparkEV

Who you honestly think that people who drive Tesla will take public transportation instead of driving giant ice car?

Dan

Nobody is preventing those people from buying Teslas. Public dollars should be spent on projects that are more broadly beneficial. Why are those two ideas in conflict? There are 781 cars per 1000 inhabitants in the US. The same rate in Hong Kong is 66. Hong Kong’s metro is better than any system in the US. That’s where they spend their public dollars. All electric trains by the way!

SparkEV

Again do you honestly think that people bought Teslas would take public transportation instead of driving Giant SUV? If they are not taking public transportation, funds diverted from EV for public transportation actually increase pollution and does not decrease traffic congestion.

Dan

Sure. A fix for a mode of transport not used by 95% of Hong Kongers. Also, your solution to congestion is to make some cars cheaper. Math education in CA seems to be a little behind than in HK, I see! It’s a good thing you have Hollywood as a career option. ?

SparkEV

Instead of questioning my math, stick to the topic at hand which is diverting ev funds to public transportation actually makes things worse, same congestion more pollution. Unless of course, you’re so delusional as to think potential drivers who would’ve bought Teslas will abandon driving cars.

Dan

The reason I’m questioning your math is because you made a stupid claim.

What exactly is the stupid claim? You don’t deny the fact I present which is that Tesla drivers aren’t likely to switch to public transportation, so you must be lacking in math to think removing EV subsidy will have people stop driving their cars.

Oswald

Yes. Their public transportation is nothing like the public transportation you’re imagining from a US perspective. Hop out of the bubble for a second and you’ll see that other people live differently than you.

zzzzzzzzzz

SparkEV:
Railway or subway is just faster and more reliable in big cities. Even in NYC.

Car is just not in the list of reasonable options for most in such case. There is not enough space for cars. You may buy in downtown skyscraper and still keep personal car in a garage next to your exclusive living place if you are rich enough, but it is not for commuting across the city.

All these people had reasons to choose living in congested city instead of countryside.

If public transportation is so wonderful, there’d be no traffic jams in NY and other places. Look at the evidence before assuming what’s in other people’s heads.

This also relate to doing something about climate change. While majority of people polled say they’re concerned about climate change, I’m surrounded by sea of SUV and trucks driven by solo drivers. Lip service means nothing.

Pushmi-Pullyu

“Nobody is preventing those people from buying Teslas. Public dollars should be spent on projects that are more broadly beneficial… Hong Kong’s metro is better than any system in the US. That’s where they spend their public dollars.”

You make a compelling case for Hong Kong spending its tax dollars to support public transit rather than personal cars. Unfortunately, your argument fails to note that while it’s better for the public good to promote mass transit over personal cars, it’s also better for the public good to promote plug-in EVs over gasmobiles. By removing the EV subsidy, all Hong Kong has done is boost sales of gasmobiles over EVs.

The correct strategy would have been to increase the taxes and annual fees on all personal cars, while leaving the EV subsidy in place. That would discourage private car ownership in favor of mass transit, but it would also encourage those who decide to buy a personal car anyway, to make it an EV.

Removing the EV subsidy does not aid the public good. In fact, it’s harmful to the public health because increasing gasmobile sales increases gasmobile emissions and therefore air pollution. It’s just a protectionist measure to support domestic Chinese gasmobile manufacturers.

Dan

In fact, Hong Kong’s MTR authority is considered in such high regard worldwide that they run Stockholm’s and Melbourne’s entire metro system as well as portions of London’s and Beijing’s. People in California like you just won’t get it. These are trains that actually run an 80% profit. They aren’t the $hitty trains you’re used to in SF or LA.

SparkEV

Judging from the massive traffic congestion, people in Hong Kong with disagree with you that their public transportation is so wonderful. Obviously, they rather take cars than take public transportation if not artificially made so expensive via tax.

Dan

Congestion pricing. Not EV rebates!

SparkEV

Whatever you want to call it, traffic jam means people prefer cars. Why else would they pay so much more than public transportation to sit in traffic.

Since traffic jam is all over the world, people all over the world are screaming “public transportation sucks”

Brando

Perhaps Hong Kong should follow California?
Give the exact same amount to all. California gives $2,500 regardless of vehicle cost. Doesn’t that seem fair ??

James

Another prove nobody’s gonna buy those overpriced Teslas without any incentives. Remove them incentives all over the world and the company is toasted

Pushmi-Pullyu

Your skill at prognostication is as poor as your grammar.

Sch

This is the tax scheme in HK:
Rate of Tax
(a) on the first $150,000 40%
(b) on the next $150,000 75%
(c) on the next $200,000 100%
(d) on the remainder 115%

They removed the complete tax exemption for EVs and introduced a cap, now you don´t pay the first registration tax only from the first $200,000. Its a clear support for cheap chinese EVs.

acevolt

What about the model 3? That would be under the threshold right? Anyway, I agree, with such a good metro system, who needs cars.

Mr. M

Its a clear Support for cheap EVs and that is the correct Thing to do. Nobody Needs to buy expensive cars.

Pushmi-Pullyu

No, it’s a support for cheap cars, of the sort most Chinese auto makers make. And the overwhelming majority of cheap cars are gasmobiles, not EVs, so this favors gasmobiles over EVs.

Hong Kong’s air pollution problem is going to get worse, not better, because of this change.

MikeM

Are these HK or US dollars? The round numbers suggest HKD.

There are about 7.8 HKD per USD.

EJ

Hong Kong is incredibly densely populated and has great public transportation. Why would you even need a car ? Only the super rich would be able to pay for parking / garaging Teslas and would be stuck in traffic forever. Why should the government subsidize them ? HK has among the biggest inequality indexes. They should subsidize electric scooters and small autonomous EVs for the elderly to get around.

Robb Stark

Because people drive outside the city of Hong Kong?

Because this policy effectively means less than 100 BEVs get sold per year while over 5k giant gas guzzling cars get sold.

A better policy is ratcheting up taxes on gas and gas guzzling cars to subsize cheap EVs that nobody wants to buy anyway.

Because people that can afford to park in Hong Kong won’t buy them.

Pushmi-Pullyu

“Because people drive outside the city of Hong Kong?”

Is there any part of Hong Kong that is outside the city? So far as I know, it’s entirely urbanized.

There is very little traffic by car between mainland China and Hong Kong. Licenses allowing driving from one to the other are rare.

I could be wrong, but my understanding is that owning a personal car in Hong Kong is merely a status symbol for the rich. There may be exceptions for people using them to haul cargo for their businesses, altho obviously a truck would be more efficient for that purpose.

Sam L

Fully agree. Congestion is a massive headache in Hong Kong, even worse than cities like London or Los Angeles.

Kill the tax breaks on public vehicles, this is not how you squander tax money that the majority would not benefit from in a city like Hong Kong.

zzzzzzzzzz

It is extremely dumb to try to bully China over former British colony Hong Kong. Nationalist ambitions may start quickly and some foreign company may found itself locked out of the whole market one way or another in no time.

Mass transit is the way for densely populated megacities like Hong Kong, not wasteful 7 million personal tank-size SUVs for every resident.

wavelet

I see no reason for a ultradense urban environment like HK to encourage any usage of cars whatsoever, with the possible exception of taxis. EVs are at most ~10% better than ICE cars pollution wise, from an entire-lifecycle viewpoint, unless electricity generation is mostly renewable — it’s just a few % in HK:
https://en.wikipedia.org/wiki/Electricity_sector_in_Hong_Kong#Generation
This especially holds for huge cars like Tesla S/X, which don’t fit the lanes or parking spaces (not just HK — this holds for most European cities and many other countries).
A.f.a. personal transportation goes, the government should promote e-bicycles and e-scooters, nothing larger.

Pushmi-Pullyu

“EVs are at most ~10% better than ICE cars pollution wise, from an entire-lifecycle viewpoint…”

I thought you were better informed than this, Wavelet. It looks like you’re citing one of those biased comparisons which compares a large heavy EV (like a Tesla Model S) to a small, relatively fuel-efficient gasmobile.

According to EPA/NREL figures, comparing electricity to gasoline on a well-to-wheel basis, powering an EV produces only 35% of the greenhouse gas emissions of an equally-powered gasmobile, for U.S. grid national average. For the California grid, it’s only 14%.

Lifetime emissions from EVs likely start somewhat higher than gasmobiles due to manufacturing processes and the EV’s battery pack, but over the lifetime of the car, the emissions from the gasmobile’s tailpipe plus the emissions from the refinery quickly overtake that.

Hong Kong’s grid may be especially dirty as compared to the U.S. national average, but it seems rather improbable that it’s so very much dirtier than the U.S. grid that your “at most 10% better” claim could possibly be true!

https://cleantechnica.com/2014/06/04/hydrogen-fuel-cell-vehicles-about-not-clean/

wavelet

I’m familiar with the NREL/EPA studies. Not relevant for HK.
No, it’s based on
1) Much smaller cars in an urban environment — esp. one as crowded as HK;
2) In that environment, annual mileage distances are tiny, so the upfront energy & pollution for production are much more significant;
3) Crowding is so bad on the road that every additional car on the road impacts the pollution and traffic jams of the cars already on the roads, and there’s basically nowhere to build new roads.

EVs are in general not a significant answer to global pollution issues; what needs to be done is reduce, radically, the number of cars overall. Autonomous cars won’t help a lot here either — only replacing many cars mass transit and a lot more 2-wheeled transport, pedal-powered as well as electric. Most families don’t need >1 car.

wavelet

Oh, and the HK grid is indeed much dirtier than the US’s on average: The US is ~15% renewable, HK is around 2% .

Pushmi-Pullyu

According to the article:

[quote] The South China Morning Post reported:

“Without government support, who is ­willing to invest in green technology?” [unquote]

If it takes a government subsidy for people to buy them, then something is wrong.

I’m all for a temporary EV subsidy to “prime the pump” to get the EV revolution started, but not a permanent protectionist status.

Anyway, if what this article says is true, then it seems pretty clear the reason Hong Kong ended the EV subsidy was due to political pressure from domestic Chinese auto makers, not because it’s really time to pull the plug on the subsidy. Personally I think the subsidy should be extended to the end of 2020 worldwide, but that’s just my opinion.

Sam L

Good. If any if you actually LIVED in Hong Kong for any period of time, suddenly 6pm traffic in Los Angeles seems to be the best driving roads in the world in comparison.

Car ownership in Hong Kong, unlike North America or Europe, is very much a luxury. The city has an extremely dense public transit network of multiple bus corporations, MTR subways (that don’t suck like TTC or NYC) and Taxis at every corner.

A simple Corolla in HKD cost as much as a Mercedes C300 when converted to USD sold here. A Tesla therefore is will serve as nothing more than traffic congestion & a rich man’s 2nd or 3rd car, and if you believe someone like that needs a tax incentive to consider a purchase, please reconsider living.

ModernMarvelFan

So, Tesla isn’t immune to incentives?

I would have thought that among any/all EVs, Tesla would have been the ONLY brand that is immune (at least somewhat) to lack of incentives (due to its often attractive value or competitiveness to gas models). But I guess it isn’t the case. That is surprising to me.