Hong Kong land of Electromobility! A firework or an example to follow?

I had recently the pleasure to visit Hong Kong and despite many positive articles about the rise of electric vehicles on the island, I was still amazed to see so many Tesla S or X driving around. This EV rise was possible thanks to smart and powerful encouragement measures which have resulted in the sale of 8000 EVs for 750’000 registered cars. This is impressive if we consider that at the end of 2010 there were fewer than 100 EVs on the road and that London has nearly the same amount of EV’s for 2.5 million registered cars.  However, some changes in Hong Kong tax benefit policies for EVs have already indicated a sales slowdown for April. That’s why I thought that it was the right moment to analyse the situation.

Why does E-Mobility matter so much in Hong Kong?

Being essentially an urban area, Hong Kong had the objective to improve roadside air quality with the reduction of gas emissions! After multiple analysis, electric vehicles with its non-existing emission for private and public transports were the right solution. Especially if we consider that;

• Electric cars have seen remarkable technological improvements in recent years, with enhanced driving performances and extended distance ranges to match petrol cars.
• Car manufacturers have come up with reliable and affordable mass-market EVs

What kind of measures did they employ to get success?

In 2011, Hong Kong started a series of measures to encourage the adoption of EVs going from tax reduction to specific encouragement programs. We can categorise these programmes in 4 sections:

A. Reducing taxes and increase subsidies to encourage EV investments

• Offering first registration tax (FRT) concessions for electric vehicle (Including motorcycles). This can represent from 40 to 115% of the car value for the first registration. However, since April 2017, these (FRT) tax reduction have been limited to $97,500 for private cars.
• Enterprises that are buying EVs, are allowed 100% profits tax deduction on the capital for the first year of procurement.
• Fully subsidising the franchised bus companies to purchase 36 single-deck electric buses and related charging facilities for trial to assess operational performances under local conditions.

B. Investment in “Green” transport related programs and initiatives

• A Green Transport pilot fund of $300 million was set up in March 2011 to subsidise the public transport sector and non-profit organisations to test out green innovative technologies, including EVs and another type of low emission vehicles. As of today (02/17), the Fund has approved trials of 68 commercial EVs, including taxis, light buses, buses and goods vehicles
• Hotline and a dedicated team was established by the Environmental Protection Department to provide information (guidelines) and technical support (charger requirements) to set up charging stations
• A government initiative to procure EVs for the authorities (where possible depending on market availabilities) to replace vehicles which are due to retire. As of today (02/17), there were 250 EVs in the Government fleet, and 15 more are due to be delivered in 2017.

C. Encouraging the investment of charging station infrastructures

• Working with the commercial sector to increase and enhance the EV charging facilities. This has resulted in 1500 public chargers covering 18 districts of Hong Kong.
• Encourage developers to put in place the necessary EV charging infrastructure in the car parks of new buildings, including provision of sufficient power supply and electrical wiring
• Recommend 30% of private car parking spaces to be installed with EV charging stations for new buildings

D. Make EV’s fully sustainable with recycling programs

• With the growing popularity of EVs, there will be gradually more retired batteries which can still be reused for energy storage. An international competition will be organised in 2017 to encourage various sectors to explore ways to make good use of retired batteries.

What are the results?

Global strategy of Hong Kong with this pack of measures have had the effect to go from 100 EV’s at the end of 2010 to 8033 at the end of February 2017. The pillar of this strategy was the rollout of 1530 Charging Station to support the rise of electric vehicles in the city.

Numbers of EVs

EV chargers information

Could it be done elsewhere?

Pushing sales of EV’s with tax reductions or strategical subsidies, laws to promote the installation of Chargers and sustainable programs to recycle batteries could definitely be done in other places! We could argue that Hong Kong has a high density, is wealthy and has a strong economy but this is also the case of countries like Japan, Switzerland, Singapore or UAE. These countries have taken few initiatives here or there but haven’t got the same results. Probably because they haven’t invested enough!

The learning of Hong Kong is that if you want results you need to start a global strategy including all economy partners (Government, Companies and Civilian) and transportation solution (cars, motorcycle, public buses, taxis) and start programs and action plans to;

• Encourage adoption of EVs (Tax reduction, Subsidies) and discourage drivers to keep high polluting cars (Tax increase)
• Setup laws to enforce the installation of public EV infrastructure (Charging Stations)
• A sustainable approach with solutions to recycle or re-use EV batteries

What is the risk of this strategy?

The risk of a strategy involving financial measures is that it has to stop after a while. Tax reductions and subsidies will push the adoption of EV’s but it is still costly.  The idea is to push the market with encouraging measures until the market is mature enough to live on its own.  The real question is about timing: When is the EV car market mature enough to live on its own? The amount of charging point looks sufficient, the problem is rather with EVs in general:

• EV car range diversity: Car manufacturer shall be ready to replace the full portfolio of cars from a small hatchback, family car to an SUV
• Prices of EV’s are dropping to a competitive level against gasoline cars.

In the next 5 years, we can expect that car manufacturers could go in an electrification of all model type of cars. VW Group or Mercedes have already done some positive announcement in this direction.  In my opinion, the “Big Bang” could come from China with its battery industry resulting in affordable and competitive EVs.

What’s next?

The EV strategy of Hong Kong is currently successful!  A step by step approach to let the EV market acting on its own is essential but should be carefully planned and adapted. Let’s see how these measures will pay off in the coming years!

Thank you to the Environment Protection Department of Hong Kong for the information that they have shared with me for this article.