In a Budget surprise, S'pore aims to 'phase out' fossil fuel vehicles in 20 years

If you were surprised, you'd be forgiven.

Sulaiman Daud | February 19, 2020, 04:20 PM

Budget 2020 was a mix of the bold and the predictable, with at least one surprise.

Long-anticipated as a "General Election Budget", the outbreak of the coronavirus (Covid-19) and the expected financial support for struggling industries added extra impetus to Deputy Prime Minister and Finance Minister Heng Swee Keat's speech.

But Singaporeans tuning in on Tuesday, Feb. 18, 2020 will have heard Heng drop a massive bombshell in the environment section of his speech. Heng said:

"Our vision is to phase out ICE (internal combustion engine) vehicles and have all vehicles run on cleaner energy by 2040."

It was subsequently carried by news wire agency Reuters.

Start trying to make electric vehicles happen, it's finally going to happen

Whoa. Let's just take a moment to think about the implications of that one line.

For years, Singapore has been somewhat officially reticent on the sale of electric cars.

Remember Joe Nguyen?

Back in 2016, he shared his long and burdensome journey of dealing with the Land Transport Authority (LTA) for a year:

"They kept asking for more and more paperwork,” Nguyen reveals, “They wanted the specs, they wanted a number of different metrics, everything from emissions to the certificate of conformity, which is related to petrol cars and Tesla doesn’t have it.”"

Nguyen had to pay a S$15,000 surcharge instead of qualifying for a S$15,000 rebate for eco-friendly cars, as LTA said that the electricity consumption of his car was excessive.

Incidentally, Singapore's electricity generation is powered almost entirely by natural gas, which emits much less carbon emissions than other fossil fuels.

Elon Musk: Singapore government not welcoming of Tesla

Tesla's CEO Elon Musk, one of the inspirations for the cinematic version of the superhero Iron Man, voiced his frustrations with the Singapore market in a 2018 exchange.

Tesla is one of the world's most prominent electric vehicle companies.

In a May 2018 tweet, he said that the Singapore government is "not supportive" of electric vehicles.

In Jan. 2019, Musk said that the Singapore government has been "unwelcome" to his company.

According to the Straits Times, Musk did not elaborate, but the government earlier responded that it is supportive of hybrid buses and electric vehicles.

BlueSG, an electric-car sharing service in Singapore, was launched in Dec. 2017.

In one year, it reported significant interest, with more than 20,000 subscriptions and around 100,000 rentals.

It also announced that it would open up its charging stations to privately-owned electric vehicles from 2019 onwards, according to the Straits Times.

Masagos: Tesla cars are a lifestyle, public transit is the answer

In Aug. 2019, none other than Environment Minister Masagos Zulkifli said that Musk's Tesla cars are a "lifestyle", and the government was not looking to electric vehicles as a way to tackle the apocalyptic effects of climate change.

Instead, Masagos said that enhancing mass transit was the preferred tool to bring down rising carbon emissions.

Masagos also highlighted the difficulty of installing sufficient charging stations for electric vehicles. He said:

"Just choosing a parking spot is already problematic. And now you want to say who gets the charging point. We do not have the solution yet."

No Dyson

In another apparent setback, British company Dyson axed its plans to manufacture electric vehicles in Singapore.

Announced in Oct. 2019, Dyson could not find a way to make its project commercially viable.

It also did not obtain incentives from the government.

The revolution will be electrified

Given this history of lukewarm exchanges, Heng's unveiling of Singapore's electric vehicle plans was a genuine jaw-dropper.

In 20 years, there will hopefully be no fuel-burning vehicles left in Singapore.

Everything, from your dad's battered old family sedan to public buses to a towkay's mid-life crisis trophy, should run on electricity.

It is a sea-change from what we've always known. But given the threat of climate change, perhaps it is one that is necessary.

So what can we expect?

More charging points

Masagos's point remains valid.

In order to make a 100 per cent electric vehicle nation viable, we'll need to have enough charging points for everyone.

Shell has already taken the first steps of the revolution, offering electric vehicle charging points at its petrol stations.

After all, in 20 years, petrol stations themselves might go the way of the ice kacang roadside stall and Kiasu Burger as relics of Singaporean history.

But offering a place for you to charge up your car? A shining example of a business adapting to changes in technology.

Perhaps by the time today's babies are finishing National Service, every HDB and office carpark will have charging points for every lot.

Heng announced that by 2030, the government aims to have 28,000 chargers at public carparks across the island.

Where are the disincentives to give up fuel-burning cars?

We've heard about the incentives. But what about the punishments?

As recently as Feb. 6, South China Morning Post (SCMP) wrote a piece that proclaimed: "Car enthusiasts can forget about the tax breaks incentivising electric car ownership that some countries get; everything car-related in Singapore is punitive."

SCMP added:

"So, forget about the tax breaks incentivising electric car ownership that some countries get. This might be the biggest thing stopping widespread adoption of electric cars in Singapore."

But let's look at Heng's speech again.

  • There are incentives for people to adopt electric vehicles.
  • There are efforts to expand public infrastructure to support electric vehicles.
  • There are necessary revisions to the Road Tax, to make up for the inevitable loss in tax revenue that comes with axing fuel-burning cars.

In other words, there are lots of carrots, and no sticks at all. Heng made no mention of any bans on fuel-burning cars.

Quartz wrote in Aug. 2018 of announcements by countries like Norway, France and the UK to phase out those cars, but pointed out that they did not mention legislation to ban them.

If there are incentives to adopt electric vehicles but no disincentives to give up fuel-burning vehicles, there might be diehards clinging on to their beloved old cars, unwilling to let go.

Of course, 20 years is a long time, and Masagos may elaborate more on the government's electric vehicle efforts in the Budget or Committee of Supply debates.

The Singapore government is certainly no stranger to punitive legislation to discourage what it deems are negative practices.

Car industry

Assume that the target is achieved and by 2040, every vehicle in Singapore runs on electricity.

What will happen to the local car industry?

You'd have to imagine that Heng's speech sent some rumblings among the industry players.

Tesla isn't the only company on the market offering electric cars, of course. Nissan has one, and so does Audi.

But not every car company offers electric cars, and not every company that offers a full range of electric cars, from family vehicles to trucks to high end sports cars.

If car companies don't adjust in the next two decades, it's possible that business may take a hit. But they have a fairly lengthy heads-up, at least.

Related story

Top image from MOF and Tesla Fans in SG Facebook group.