Why doesn't Singapore have more electric vehicles?

Shreya Desai

2% of cars worldwide are electric vehicles. But only 0.16% of cars in Singapore are electric. Why?

The scope of Singapore’s public transport network as a means for transport electrification and reducing carbon emissions is severely underestimated.

Fuel-powered vehicles cause significant air pollution through carbon emissions, negatively affecting the health and wellbeing of third parties, as well as the surrounding environment. This is a negative externality of consumption* and suggests market failure. Electric vehicles are a substitute that can help reduce these negative externalities. It is important to keep in mind that there will always be external costs* associated with the consumption of cars.

In the short run, Singapore faces an issue with the lack of sufficient charging infrastructure. Although there are “more than 100 charging stations islandwide”, experts say “this is still not enough to see adoption of electric vehicles here on a larger scale,” suggesting that there are other measures that need to be taken to achieve wider consumption of electric vehicles in the long run.

"more than 100 charging stations islandwide....is still not enough to see adoption of electric vehicles here on a large scale"

It seems, however, that many petrol companies are already beginning to recognise the need to facilitate charging of electric vehicles by implementing charging stations at their petrol kiosks, like “Utilities provider SP Group [who] has 200 charging points islandwide. By the end of next year, it will have 1,000 such points.” This, together with other government measures will cause wider adoption by the taxi sector as it makes charging infrastructure more accessible.  

A comparable example is Norway, “where around 10 percent of the vehicle population is electric...spurred by significant financial incentives from the authorities.”, including steep taxes on gas and diesel vehicles, as well as the fuels themselves to disincentive the use of fuel powered vehicles. In Singapore, extremely high indirect taxes* on fuel powered vehicles are already in place to reduce consumption. The impact can be seen where car ownership among Singaporeans and Norwegians is about 0.2 and 0.52 cars per capita respectively. Further indirect taxes on fuel powered vehicles are unlikely to lead to higher private adoption of electric vehicles as public transport in Singapore remains a more attractive alternative. 

Instead of creating islandwide infrastructure to promote electric vehicles, higher adoption of electric vehicles could be facilitated within the public transport system to reduce emissions. 

Government intervention should therefore focus on the existing public transport sector, specifically, incentivizing buses and taxis to go electric. The bus network is already subsidised* and there is opportunity to reallocate the subsidy towards making buses electric. Taxis could be encouraged to go electric by reducing indirect taxes such as the Certificate of Entitlement and Electronic Road Pricing systems and subsidies on electric vehicle production would reduce operating costs. This together with improved accessibility to charging stations would encourage mass adoption among taxis. 

However, the extent to which subsidies and reduced indirect taxes would be used depends on the opportunity cost associated with these interventions. Regardless, this switch would not only have a positive impact on the environment but in the long run, it would be more cost effective as “the cost of electricity per kilometre is much cheaper than that of petrol.”

Public transport is Singapore’s way of promoting sustainability. There are numerous government interventions that have successfully reduced the amount of cars on the road, and caused the switch to public transport. The government should now focus on reducing carbon emissions further by spearheading the adoption of electric public buses and taxis. Such a strategy would encourage wider public acceptance towards electric vehicles in the long run.

*negative externality of consumption - a situation in which the consumption of a good or service generates a negative effect on a third party, which has not been considered when deciding to consume that good.

*external costs - created by negative externalities

*indirect taxes - tax imposed upon expenditure and is added to the selling price of the good. It is placed on the producer or supplier, raising firms' costs of production.

*subsidy - is an amount of money granted by the government to a certain firm or industry. It decreases the firm's costs of production, and is ideally passed on to the consumer

(Definitions adapted from Kognity Textbook)

1. Duffer, R. (2019, May 20). Why Norway leads the world in electric vehicle adoption. Retrieved from https://www.greencarreports.com/news/1123160_why-norway-leads-the-world-in-electric-vehicle-adoption

2. List of countries by vehicles per capita. (2008, January 8). Retrieved from https://en.wikipedia.org/wiki/List_of_countries_by_vehicles_per_capita.