The government said on Wednesday it would not cap tax-free concessions for luxury electric cars despite losses to its coffers - as this could hinder promotion of the use of electric vehicles (EVs).

 

But a transport expert suggested the government should go further and prioritize promoting the use of EVs to replace not only private cars but also conventional commercial vehicles such as public buses and taxis.

 

In a written reply to a lawmaker's inquiry on the issue, Secretary for the Environment Wong Kam-sing said EV technology was still under development, with high research and development costs compounded by low production volume leading to high per-unit costs.

 

Wong noted the cost situation was more acute among commercial vehicles, which are priced upward of HK$1 million. He added that the waiver of the Motor Vehicles First Registration Tax was an important strategy in promoting the use of EVs.

 

Despite the environmental benefits of emission-free vehicles, members of the public have queried whether tax exemptions for luxury sport EVs were subsidizing affluent people to purchase luxury cars at the public's expense.

 

Hong Kong retains a First Registration Tax on all petrol cars on a sliding scale up to 115 percent of its purchase price.

 

The total number of EVs registered between 2014 and 2015 went up by 13 times, from 106 a year before to 1,302. That was a result of a hike on tax for vehicles with a retail price between HK$600,000 and HK$1 million. During the same period 840 EVs of such value were registered, while only 10 were registered in the previous five years.

 

This coincided with the debut of Tesla in Hong Kong. The leading electric carmaker unveiled its luxury sedan with a price range between HK$600,000 and HK$1 million in July 2014, as the company seeks to gain from the increasing popularity of EVs.

 

According to the government, a total of HK$816 million in taxes was waived between 2014 and 2015 as the EV market thrived. A year before that, only HK$10.87 million was exempted for EV buyers.

 

Professor at the Department of Mechanical Engineering of the Polytechnic University of Hong Kong (PolyU) Cheung Chun-shun agreed incentives to encourage commercial vehicle buyers to choose low-emission EVs were necessary. This is because they are still more expensive than traditional diesel vehicles.

 

Despite all the promising figures, Associate Professor at the PolyU Department of Civil and Environmental Engineering Hung Wing-tat said the people benefiting from the tax subsidy were mostly private car owners.

 

Hung warned the continuing incentive would inevitably drive up the total number of vehicles on the roads - without replacing the diesel ones as much as the government expected.

 

Hung said a taxi travels around 300 kilometers daily, more than 10 times the distance of private vehicles. Public transport vehicles are the major polluters on the road, the researcher said.

 

Hong Kong, with its limited space, is a suitable place for EVs as it does not put too much pressure on the battery life. But the city currently only has around 1,200 charging points for a total of 2,889 EVs. Lack of charging points and being too costly remain the two obstacles for the widespread use of EVs in the city.

 

Apart from the tax incentive, Hung believed the government should instead build more charging points for commercial vehicles to make electric buses operational for bus companies.