Sparking Singapore’s electric dreams

However, several exciting developments related to EVs have taken place recently. The pace for EV adoption has quickened as many nations of the world acknowledge climate change as an existential threat to humankind. Decarbonisation is the only way forward. If things continue to gather pace, EVs could very well displace ICE vehicles as the de facto choice of transportation for Singapore car owners within the next decade. Still, there are significant hurdles to overcome.

On Feb 9, EV manufacturer Tesla launched its Singapore sales portal. The EV manufacturer is selling its Tesla Model 3 Performance for an estimated price of just under $155,000 before the Certificate of Entitlement (COE). The less powerful Model 3 Standard Range, on the other hand, will retail for around $113,000 before COE. In comparison, Toyota’s 1.8L Prius+ is priced at $130,888 with guaranteed COE.

A day later on Feb 10, the Singapore Green Plan 2030 was jointly unveiled by several ministries. The plan outlines the city-state’s aspiration to achieve long-term net-zero emissions, in line with its commitment to the UN’s 2030 Sustainable Development Agenda and Paris Agreement. The ministries involved are the Ministry of Education, Ministry of National Development, Ministry of Sustainability and the Environment, Ministry of Trade and Industry, and Ministry of Transport.

Under the Singapore Green Plan 2030, all new vehicle registrations will be required to be cleaner-energy models by the end of the decade. The deployment of charging points will be raised to 60,000 by 2030 from the previous target of 28,000. The existing vehicle tax structure will also be revised to make it easier to buy and own EVs.

These initiatives were subsequently reiterated by Deputy Prime Minister and Finance Minister Heng Swee Keat, who provided further details in Budget 2021 on Feb 16. Heng noted that the 60,000 charging points will be located at public car parks and private premises. A funding of $30 million will be set aside over the next five years for EV-related initiatives, including improving charging provision at private premises, he said.

To further encourage the early adoption of EVs, the cost differential between electric cars and ICE vehicles will be narrowed, Heng added. This will be achieved through the lowering of the additional registration fee floor for EVs to zero from January 2022 to December 2023. Mass-market EV buyers, he says, will be able to maximise the rebates from the EV Early Adoption Incentive. Also, the road tax treatment for electric cars will be revised so that mass-market EVs will have road tax comparable to their ICE peers.

At the same time, the use of ICE vehicles will be further discouraged. On March 4, Transport Minister Ong Ye Kung announced that Singapore will cease new registrations of diesel cars and taxis from 2025. Moreover, the duties for premium and intermediate petrol were raised by 15 cents a litre and 10 cents a litre respectively on Feb 16.

To ease the transition, the government will cushion the immediate impact of duty hikes. Heng said a 60% road tax rebate will be provided to all motorcyclists for one year. Individual owners of smaller motorcycles up to 400cc, too, will receive $50 or $80 in cash, depending on engine capacity. For active drivers of taxis and private hire cars using petrol and petrol-hybrid vehicles, a petrol duty rebate of $360 will be given out over four months, said Heng. This is in addition to a one-year road tax rebate of 15% to all taxis and passenger cars using petrol.

On the other hand, drivers of goods vehicles and buses running on petrol will be provided with a one-year road tax rebate of 100%. For private drivers using petrol cars, a one-year road tax rebate of 15% will be provided. All road tax rebates will take effect from Aug 1.

Financial institutions and other companies are jumping on the EV bandwagon too. Just the day before Budget 2021 was tabled, DBS Bank announced that it will launch the DBS Green Car Loan to encourage car owners in Singapore to reduce their carbon footprint. The bank is also Tesla’s preferred financing partner here.

OCBC Bank, on the same day too, announced that it had signed a strategic partnership with Charge+, an operator and provider of EV charging solutions. Charge+ is a subsidiary of Temasek-backed solar energy solutions provider Sunseap. Charge+ aims to install 10,000 charging points across Singapore by 2030.

OCBC says it is the preferred banking partner of Charge+. The bank adds that it will implement digital payment solutions for the charging service and explore the financing for the infrastructure.

On March 15, OCBC launched its enhanced EV loan called the OCBC Eco-Care car loan package. Borrowers of the EV loan get to enjoy other benefits too (See Charge+ story).

Chicken and egg conundrum

So, what’s there to stop Singapore from achieving its electric dreams? One of the main challenges besetting the widespread adoption of EVs is the lack of charging infrastructure. This is the greatest concern among consumers in Singapore and most other countries in Southeast Asia, according to a recent study conducted by the Deloitte Global Future of Mobility Solution Centre (DGFMS).

Among the existing players in Singapore, Greenlots has 50 charging stations with at least 70 charging points. Most of its charging points are located at Shell petrol stations. Greenlots is a subsidiary of oil major Royal Dutch Shell.

SP Group also has a network of 291 charging points in 63 locations. The public utilities company aims to set up another 231 charging points by next year. SP says its charging points are conveniently located at sites such as shopping malls, commercial buildings, business parks and industrial sites. “We are committed to meeting the demand for EVs and creating a low carbon, smart energy Singapore,” Stanley Huang, group CEO of SP, tells The Edge Singapore.

Meanwhile, Chinese EV manufacturer BYD has 122 charging stations island-wide. Most of its charging stations are concentrated in the central area of Singapore.

But BlueSG may have the greatest number of charging points in Singapore, with 345 charging stations offering 1,371 charging points island-wide, as of Aug 10, 2020. However, the EV car-sharing company’s charging stations are not open to non-BlueSG EVs.

Overall, the number of charging points is meagre, even with the inclusion of Charge+. Unfortunately, rolling out more charging infrastructure faces a significant challenge. Charging operators are keen to develop more charging points only if there is a significant rise in the number of EVs. Yet, drivers are only keen to transition to EVs only if sufficient and rapid charging infrastructure is put in place.

As a result, both the number of EVs and charging points have increased at a snail’s pace over the years. “It’s a chicken-and-egg scenario,” says Andrey Berdichevskiy, leader of DGFMSC. So, how can this conundrum be solved?

The way Berdichevskiy sees it, deploying the charging infrastructure is akin to saying both the chicken and egg come first. The solution is to install charging points at places where optimal demand is determined, he says. This way, the chicken-and-egg problem would be resolved, he believes.

According to Berdichevskiy, China faced the same problem. The country, which is one of the earliest and biggest proponents of EVs, had set an ambitious target of installing 4.8 million charging points by 2020. However, it had only achieved about a quarter of that target last year.

Berdichevskiy points out that in the early days, the provincial governments were on track to roll out the charging infrastructure. They had successfully raised investments from the private sector. As a result, charging points were almost ubiquitous in urban areas.

Meanwhile, businesses providing services of convenience in charging EVs had started to mushroom. “So, a lot of my colleagues in China own an electric car. They have an app where they can just push a button to send somebody over to pick up their car. That person drives it to a charging station and brings it back after charging,” Berdichevskiy tells The Edge Singapore in an interview. “It’s perfect, right?”

However, things began to unravel for many of the charging station operators. Berdichevskiy says many of their charging points were underutilised. As a result, they faced financial difficulties, leading some to close for good since they were loss-making. “In China, it took the charging operators an average of seven to eight years to break even,” he says.

The better way, says Berdichevskiy, is to build charging infrastructure according to a demand heatmap. This would require the use of analytics to identify the locations with potentially high utilisation rate, he explains. Doing so may help operators of charging infrastructure achieve break-even quicker in four to five years, he adds. This would make the most sense in terms of the return on investments, he says.

Execution challenges

Still, executing the roll-out of charging infrastructure will not be easy. Power supply is another issue. Approval from property owners to install charging infrastructure is an added complication.

Niels de Boer, programme director of future mobility solutions (autonomous vehicles) at the Energy Research Institute @ NTU, notes that Norway has been one of the most successful countries to roll out its charging infrastructure due largely to the country’s unique characteristics, he says.

For one, Norway’s strong electricity grid powered by hydro energy allows it to provide cheap electricity. The country’s low population density also helps, De Boer says. With a landmass of about 385,170 sq km and a population of 5.3 million, most of its residents live in landed properties. This provides ample space for a garage or parking space, he says.

“So, installing a relatively small EV charger is straightforward and simple,” De Boer tells The Edge Singapore. “With cheap electricity and subsidies, you can see their EVs are really taking off.”

In comparison, Singapore does not have hydro energy sources; its electricity grid is mainly powered by gas-fired power plants. As a result, the fluctuation in gas prices does not guarantee cheap electricity rates. Furthermore, Singapore’s existing electricity grid may not be able to handle the additional load arising from the charging of EVs. De Boer says the mass entry of EVs may overload the electricity grid. “For example, the charging of half a million EVs will have a huge impact on the grid,” he says.

The city-state’s limited land supply is also a disadvantage. With a landmass of just 728 sq km and a population of about 5.6 million, Singapore has one of the world’s highest population densities. Most Singapore residents live in non-landed properties like HDB flats and condominiums. Thus, having a garage or parking space to charge EVs is limited.

Although most Singapore consumers expect EV charging points to be installed in public locations, a sizeable amount still expect charging points to be located at home, according to the DGFMS study. Berdichevskiy warns that older residential properties may not have sufficient space to install charging points. Also, their existing electricity infrastructure may not be able to take on the additional load from charging EVs, he adds.

The type of residential property also makes things trickier. For condominiums, fragmented property ownership, with an additional layer of management committees, may delay the approval process to install charging points, Berdichevskiy warns.

Public housing residents, too, have their challenges. The various government statutory boards may be able to address the development of EV charging infrastructure since the bulk of Singapore’s population lives in public housing, says Berdichevskiy. Without an integrated plan, various government departments might overlap in what they want to regulate, or certain aspects might fall through the cracks in between the limited purviews of different regulators.

The better approach, says Berdichevskiy, would be for one statutory board to spearhead the roll-out. A good example of that, he points out, is the Land Transport Authority (LTA), which took the lead to develop the ecosystem for autonomous vehicles here. “So, now is the point in time where there is a need to do the same thing for EVs,” he says.

De Boer agrees. He believes the roll-out should be led by a single entity, whether public or private. Just like how Singapore fibre-optic network was laid out by NetLink Trust and then leased out to the telecommunications companies, he reckons that such an approach might be helpful. “It might not be the solution, but at least consider a similar model,” he says.

Costs still high, choices limited

EV charging infrastructure aside, there are other challenges to EV adoption. Walter Theseira, associate professor of economics and head of its master of management (urban transportation) programme, notes that battery prices are still high, making many EVs unaffordable to the mass market.

“When you look at Tesla, the strategy was to start with ultra-high-end EVs initially, when battery prices were still extremely high, and to build the mass-market models such as the Model Y and Model 3 only when the battery technology became more mature. Even now, most would hardly consider the Model 3 or Y a mass-market vehicle as they are in the same space as midrange luxury cars,” he tells The Edge Singapore.

According to the DGFMS study, 43% of Singapore consumers are only willing to pay between $75,000 and $150,000 for an EV. That is well within the budget for the Model 3 Standard Range, but not for the more powerful Tesla Model 3 Performance. Only 17% of Singapore consumers can afford the latter since they are willing to fork out between $150,000 to $200,000 for an EV. Meanwhile, 19% of Singapore consumers are priced out completely since they are only willing to pay less than $75,000 for an EV.

But as battery prices continue to fall, lower-end EVs will become more viable, Theseira says. He reckons battery costs are expected to reach the level at which building EVs will be as cost-competitive as conventional ICE vehicles sometime in the middle of the decade.

“That is quite a huge factor, because what makes EVs different are that the key technologies are still expected to improve in performance and cost every year, whereas there is no expectation that ICE technology can improve to the same extent. That is why EVs are very much the future and ICE is a dead-end technology,” he says.

The choice of EVs is another challenge. Thus far, Tesla and BYD appear to be the only pure EV manufacturers that are selling their vehicles here, though their range of models is limited compared to ICE vehicles. Traditional auto manufacturers also do not have an extensive line-up of EVs yet. “There is not enough choice of models,” says Deloitte’s Berdichevskiy.

EV maintenance service providers are also largely available only with official dealers and/ or EV manufacturers currently. Theseira points out that there is currently no third-party maintenance sector for EVs. This means that early adopters will be stuck with having to use the official dealer for repairs for some time, he says.

While standard mechanical repairs can probably be done by third-party workshops, repairs to the EV power system and batteries will likely remain specialised tasks for some time, he says. This is until more technicians are trained by the EV manufacturers, who then decide to venture out and start their third-party workshops, he explains.

Another long-term concern is recycling, says Theseira. He explains that EVs are expected to have considerable residual value due to the remaining capacity of the batteries and rare metals contained within. “So, an EV recycling system does have to be developed, though it may not be onshore,” he says.