Hong Kong kills EV registration credit, Tesla nopes hard
EV buyers are paying up to 80 percent more to ride the lightning now that a tax credit has been canceled, and Elon Musk is calling BS.
While China as a whole has made a massive push toward electric vehicles in a bid to rid itself of its notoriously toxic air, Hong Kong's EV market has floated along on sizable tax incentives until recently. Now the tax incentives are gone, private use EV sales have plummeted and Elon Musk isn't having any of it, according to the South China Morning Post.
During the period from April to December of 2017, only 99 new electric vehicles were registered in Hong Kong. That doesn't sound all that bad until you see that during the same period in 2016, over 2,000 EVs were registered. The cessation of the tax incentive meant that buyers were expected to pay around 80 percent more to ditch fossil fuels and let's face it, most folks' environmental concerns just don't run that deep.
Tesla has been deeply entrenched in Hong Kong EV culture since it made its first inroads there in 2010 and it has been a reasonably stable stronghold in terms of sales for Tesla. Now though, Elon Musk is threatening to pull Tesla out if Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor doesn't reconsider the tax break.
Roadshow has reached out to Tesla representatives for comment and we'll update this story if we hear anything.
These kinds of massive incentives are great to get people in the door, but when the delta between a tax cut and the price of a vehicle is that huge, it's going to cause problems. According to a source for South China Morning Post, Tesla dominated around 90 percent of the EV market in Hong Kong, and this wasn't sitting well with other large manufacturers. The source speculates that it was through their influence that the tax incentive was removed.
Massive EV tax incentives have been working to help clear China's notoriously sooty skies but the incentives are gone and sales are down.
To put this in perspective, an electric vehicle in Hong Kong (which is its own special administrative district) can cost from around 270,000 Hong Kong dollars to HK$1.1 million. This equates to approximately $35,000 to $141,000 US dollars at current market rates. All vehicles are then taxed at a rate of 40 percent for the first HK$150,000, which works out to around $7,400 US. We're not talking about pocket change here.
Proponents of electric cars in Hong Kong have proposed a 50 percent tax break to those who switch from internal combustion-powered vehicles to electric if they can prove that their old vehicle has been deregistered. This, along with the reinstatement of the original tax break, is set to go in front of the deciding body later in February.
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