Singapore, February 29, 2024 — Changes to vehicle tax structures in Singapore are poised to disproportionately impact owners of higher-value electric vehicles, potentially giving an edge to Chinese EV brands. The shift, centered around the Preview of Additional Registration Fee (PARF) rates, will see larger rebates for those scrapping older vehicles, but the benefit won’t be evenly distributed.
EV Tax Shift Favors Lower-Priced Models
New PARF rates will create a bigger financial impact on owners of more expensive electric vehicles.
- The new PARF rates are based on a percentage of the Additional Registration Fee (ARF) paid.
- Vehicles with lower Open Market Values (OMV) will receive smaller PARF rebates, but the absolute dollar difference is less significant.
- Chinese EV brands, generally having lower OMVs, are expected to benefit more from the changes.
- Owners of higher-OMV EVs, like Teslas and Volvos, will see a larger reduction in their PARF rebates.
Q: How will the new PARF rates affect EV owners in Singapore? A: The changes mean owners who scrap their vehicles before five years will receive reduced rebates, with the impact being significantly larger for those owning more expensive EVs due to the way the PARF is calculated as a percentage of the ARF.
Associate Professor Walter Theseira from the Singapore University of Social Sciences explained the likely outcome: “The new move is likely to benefit Chinese EV brands more than American or continental marques, because Chinese EVs generally have lower Open Market Values.”
Data from OneMotoring in January showed a median Open Market Value (OMV) of S$28,359 for the 11 models offered by BYD. In contrast, Tesla’s five models had a median OMV of S$49,433, Volvo’s five EV models averaged S$48,539, and Audi’s four EV models came in at S$43,263.
A lower OMV translates directly to a lower ARF. After factoring in existing rebates from the Vehicle Emission Scheme (VES) and Electric Vehicle Assessment Incentive (EEAI), many Chinese EVs already have a relatively small ARF payable.
“Most (Chinese EVs) have an ARF that is very close to the rebate limit and so they have hardly any PARF to speak of,” said Assoc Prof Theseira, a transport economist.
A median Tesla model, with an OMV of S$49,433, would initially face an ARF of S$65,923. Even with the same S$30,000 rebate, the owner would still be responsible for S$35,923.
Because the PARF rebate is a percentage of the ARF, any reduction in the PARF rate has a much larger impact on vehicles with higher OMVs. Consider the impact of scrapping a vehicle before the five-year mark.
Under the current PARF rate, a BYD owner would receive S$1,277.25. The new rate reduces that to S$510.90 – a difference of S$766.35. A Tesla owner, however, would see their rebate fall from S$26,942.25 to S$10,776.90 – a loss of S$16,165.35.
“The OMV (of continental and American EVs) tends to be significantly higher than the Chinese-branded EVs, so I think they would get hit,” Assoc Prof Theseira concluded.
The changes are expected to further influence purchasing decisions in Singapore’s rapidly evolving electric vehicle market. Readers are encouraged to share their thoughts on the new tax structure and its potential impact.
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