5 FAQs on EVs in Singapore: KPMG’s Viewpoint

While the EV adoption rate in Singapore has doubled this year compared to last, uptake in the country is still substantially behind more advanced EV markets. Of the 645,150 cars on Singapore roads in 2021, only 2,942 were electric.

Increasing EV adoption in Singapore will be critical in the next decade. This isn’t just about fulfilling climate goals, but also about capitalising on market opportunities in the transport sector, which will be key to boosting the country’s economy while creating jobs and new income streams.

The government is creating early momentum in Singapore’s EV market by providing tax incentives to consumers and grants to EV charging operators. What the government could consider as a next step to move consumers more quickly towards EVs is an outright ban on petrol or diesel-based vehicle sales. We have seen Singapore take its first steps in this direction by announcing last year that it will cease registration of new diesel cars and taxis in 2025.

Undoubtedly, an outright ban on petrol or diesel-based vehicle sales would shake up the market. Change management will need to be handled well – to create long-term benefits for the environment alongside new business opportunities for Singapore’s transport sector. For example, innovative offerings could emerge in areas such as asset leasing and insurance. Hence, a phased approach for implementation may be necessary, alongside relief measures for some of the industry players that may be impacted by this ban. Successes locally could be scaled and repurposed for other key markets in the region that are currently experiencing high EV demand, especially for two-wheelers, enabling expansion of Singapore’s footprint in EVs.

In terms of environmental benefits, EVs provide a chance to reduce the significant portion of Singapore's greenhouse gas emissions that come from land transport. The sector accounts for 15 percent of Singapore’s total emissions, the country's third-largest source. EVs can also reduce the local air and noise pollution caused by internal combustion engine vehicles (ICEs). 

EVs still have a somewhat lower profile among consumers, who are deterred by their high upfront costs compared to ICEs. Price is a clear factor, especially given that there is no established second-hand market for EVs yet. To create more momentum for EV adoption, government policies need to focus on making EVs more affordable and convenient.

Current subsidies such as Singapore’s EV Early Adoption Incentive (EEAI) and the Vehicular Emissions Scheme (VES) can save consumers up to a combined S$45,000 on the purchase cost of a new EV. Such initiatives are expected to taper off as EV adoption increases, given that the EEAI is set to end in December 2023, and the VES will run until December 2025. There is still plenty of policy space remaining for the government to support an even more aggressive transition to EVs since the high cost of getting a car on the road in Singapore largely comes from taxes and certificates of entitlement.

While such measures are designed to help bolster initial EV uptake, consumers themselves will have an even more critical role to play in choosing between EVs and ICEs. Their decisions will depend not only upon affordability, but also on considerations such as convenience and lifestyle choice. Range anxiety remains a key concern, for example. EVs can generally drive for one-fourth of the distance of an equivalent ICE car before needing to recharge. Hence, government subsidies alone are not enough to push for greater momentum on EV uptake. Infrastructure providers will need to set up enough chargers island-wide in good time to cater to the growing numbers of EVs and allay consumer concerns. 

This is a chicken-and-egg dilemma. Potential buyers are waiting until more EV chargers are deployed across the country before they buy an EV, while private charging infrastructure providers are waiting for sales to pick up before expanding their network.

Expanding EV charging infrastructure to support growing demand will be key for EV viability. This requires raising the number of charging points from the close to 2,000 available island-wide as of end 2021. The government’s target to have 60,000 EV chargers installed in Singapore by 2030 will be sufficient to support increased use of EVs. The current committed pipeline of public EV chargers over the next decade will provide a much-needed boost to accelerate adoption.

The Government has provided tactical subsidies such as the Electric Vehicles Common Charger Grant, which supports installation of shared charging infrastructure in non-landed private residences.  With its recent tender for the installation of over 20,000 public chargers in HDB carparks, the government is supporting EV infrastructure in order to encourage private players to come in and invest. We expect such government support to be increasingly prevalent in the near future, as authorities step in to actively drive EV adoption and developments, thereby also kick-starting the market and creating momentum for industry players to quickly scale up charging infrastructure.

As the charging network expands, the electric grid will also need upgrades to meet higher demand. The Government has planned for such upgrades until 2040. In countries like Singapore, where electricity supply is managed by a single operating entity, grid capacity is easier to plan for and manage than elsewhere. We expect that this will hasten overall progress in Singapore, putting us ahead of countries where grid operations may be overseen by several entities.

The Government has also begun to leverage financial markets to fund infrastructure for EVs over the medium-term. Clean transportation will be eligible for some of Singapore’s S$35 billion in sovereign and public sector green bonds, planned to be issued by 2030. As a regional financial hub and at the forefront of EV readiness, Singapore is well-positioned to make further strides into the corporate green bond market, especially on clean transportation. This can speed the roll-out of infrastructure by loosening capital constraints caused by a lack of private financing.

Of the 988,755 motor vehicles in Singapore as of end 2021, around 25 percent were for commercial use, including cars for private hire, taxis, buses and goods and other vehicles. Adopting EVs for these various use cases poses far greater challenges than for privately owned vehicles.

Firstly, there is a lack of availability in Singapore of commercial EV goods vehicle models – ranging from pickup trucks through to very heavy goods vehicles – and the upfront costs can be three times that of ICEs. Secondly, there are limited viable operating models in Singapore for commercial fleets due to long charging times, since any operational downtime could lead to related income losses for drivers of goods vehicles as well as of taxis and private-hire cars for ride-hailing services. Lastly, a robust second-hand market is still absent, posing difficulties for financiers and operators to assess the risk of investing in various types of commercial EVs. Further engagement with industry players is needed to close these gaps.

Strides are being made in the public transport sector, with Government plans to have half of Singapore’s public bus fleet electrified by 2030. The Government should now focus on impactful segments for commercial EVs such as taxis and private-hire cars for ride hailing services. One major opportunity includes looking into supporting taxi fleet operators to deploy charging points across the country. There is some concern among the public that customers may ultimately see price hikes in their use of ride-hailing or taxi services if providers seek to pass on any higher initial costs of purchasing EVs. However, such taxi and private-hire EVs will actually save drivers money in the long term because of lower operating costs. EVs have fewer moving parts than ICEs, making them less prone to breakdown.

A key factor for success will be enabling drivers of various types of commercial vehicles to shift their mindsets to schedule-in the slightly longer charging times required in place of previous petrol station pitstops. This will also become easier as charging infrastructure is rolled out and technologies improve.

The Land Transport Authority’s target to have all new cars and taxis on the road be of cleaner energy models by 2030 is a critical step towards Singapore’s wider decarbonisation agenda. As well as EVs, “cleaner energy vehicles” include hybrid models that are powered by a mix of ICE and electric motors. There is no specific national target related to full-battery EVs. Adopting hybrid vehicles is a necessary step in the transition from conventional ICEs. Hybrids allow conventional fuel providers such as gas stations to adjust their business models and repurpose current assets to adapt to the emerging EV ecosystem.

Focusing on both EVs and hybrids rather than just pure EVs is particularly important in Singapore, where the cost of vehicle ownership is rather prohibitive. This gives some leeway for operators to test different operating models – such as vehicle sharing and leasing – to find commercially sustainable approaches.

Local enterprises and investors must be quick to adapt to an evolving landscape of EV and hybrid car use on multiple fronts. Technology, consumer appetite and a skilled workforce are among the basic building blocks of a thriving EV ecosystem. Governments, businesses and the workforce need to work together to deliver on the once-in-century opportunity that decarbonisation of transport presents. 

For media queries, please contact:

Jeanie Lee

Associate Director, Marketing & Communications
KPMG in Singapore
E: jeanielee@kpmg.com.sg

Asha Raghu 

Communications Manager
KPMG in Singapore 
E: asharaghu@kpmg.com.sg