Leading automobile manufacturers yesterday urged governments to play a crucial role in revving the electric vehicle (EV) revolution set to grip cities across the world.
They are calling for monetary incentives or tax breaks to be given to consumers in order to encourage the adoption of EVs.
When EVs become commonplace, incentives can then be dropped – but costs of EV would have decreased by then to become more affordable, experts said yesterday at a panel discussion on sustainable mobility at the Clean Energy Expo Asia.
EVs, which run on electricity, are considered to be more environmentally-friendly than conventional cars that guzzle fossil fuels as its greenhouse gas emissions are lower and it addresses the issue of over-dependence on fossil fuels.
Consultancy firm McKinsey Co associate principal Rohit Razdan said it seemed the consensus amongst industry leaders was that the EV revolution was a matter of “when” not “if”.
He said EVs will penetrate at least 10 per cent of the global transport sector in the next 10 years.
There are many challenges, however, such as consumer acceptance and building the infrastructure solutions for EVs, he added.
Audi is another car manufacturer which is driving EV development. It is targeting the high-end market however, while Renault is aiming for the mass market segment. McKinsey’s Mr Razdan said a recent study by the firm showed that EVs did not only appeal to a niche segment, such as “greenies”, but found that EVs appealed to the entire spectrum of a population, from the wealthy early-adaptors, to the lower to middle class folks who just want an efficient car that is less expensive to run.
But the adoption of such cars need incentives to get the engines going.
French car maker Renault’s Asean and Japan area operations manager Arnaud Mourgue said current tax regimes in some countries will make EVs too costly to compete with conventional cars.
For example, an EV including its battery, could be sold to consumers in Singapore by next year for about S$70,000 to $80,000 – which is comparable to a conventional mass market car currently. But with the current tax regime for cars in Singapore, an EV would cost nearly $200,000 for the average consumer to purchase.
The $70,000 price tag is only available for corporate and organisations who are taking part in the Singapore government’s EV test-bedding scheme. Under a scheme called Tides, or Transport Technology Innovation and Development Scheme, taxes will be waved for EVs.
Renault said it is in talks with the Energy Market Authority (EMA) and the Land Transport Authority (LTA to bring in a fleet of EVs by next year for Singapore’s EV pilot project.
Last month, German firm Bosch was appointed by EMA and LTA to set up the infrastructure for the EV programme.
Industry experts called for similar schemes for consumers to be provided to get things moving, especially in the bigger Asian cities.
“Incentives are a necessity at launch to reach a certain volume to get the economies of scale. After a few years, we won’t need those incentives. Infrastructure of the network, mindset of our customers and production efficiency will be there,” said Mr Mourgue.
Managing director David Chou of EV World, which converts existing cars into EVs, agreed.
“Such incentives will help tip the consumer on the side of EVs, and we will see more EVs on the road. Technology improvement will also constantly be bringing the costs down,” he added. He said EV World has been approached by many “big name” corporations to convert entire fleets of vehicles into electric ones.
At the event yesterday, guest-of-honour Minister for the Environment and Water Resources Yaacob Ibrahim noted that as the international community grapples with the challenge of reducing carbon emissions, there will be a growing need to deploy clean energy and energy efficient technologies to meet global energy demand.
He cited an HSBC report that estimated the market for low-carbon and energy efficient technologies is about US$740 billion currently, and this is expected to triple to US$2.2 trillion by 2020.
