According to a report by Bloomberg Intelligence, Hong Kong – known as the haven of electric cars – alone accounted for around 6% of the worldwide sales of Tesla Inc (NASDAQ:TSLA) Model S sedans. Last year, Elon Musk – Tesla CEO – called the city a beacon for electric vehicles. However now, due to the reduction of tax incentives in Honk Kong, the price of electric cars will rise in the region, making them less attractive.
Will Tesla sales drop in Hong Kong?
As per a report by South China Morning Post, Paul Chan Mo-po – the Financial Secretary, said in his budget speech that discounts given on the first registration tax would be capped at HK$97,500, which means a Tesla Model S owner would have to pay around 80% of the tax payable on the vehicle.
Chan Mo-po said the registration tax for the electric motorcycles, commercial vehicles and motors tricycles will be completely waived from April 1, 2017 to March 31, 2018. “However, the first registration tax waiver for electric private cars will be capped at HK$97,500,” said SCMP.
The Environmental Protection Department says there are over 8,000 EVs of all brands in Hong Kong, in comparison to only 100 in 2010. This shows that the demand of electric cars in the city is rising. But this reduction in tax incentives could be a red light in terms of sales of electric cars in the city. From next month, the base Tesla Inc (NASDAQ:TSLA) Model S will be taxed at$56,000 USD ($435,000 HKD). This means, the price of the car will be almost twice in Hong Kong, notes Inside EVs.
This new policy is ‘dumb’
The tax incentives are being reduced to reduce the traffic congestion. But many think the new policy is absurd and dumb. Mark Webb-Johnson, a Tesla owner and chairman of Charged Hong Kong, said this policy will raise the cost of electric cars by at least 50%. Charged Hong Kong is a group supporting the adoption of plug- in electric vehicles.
Webb-Johnson said, “It’s a dumb decision, a really crazy decision. It’s going to have a massive effect on the market.”
In an email to Bloomberg, Tesla told that almost all their new customers are replacing a particularly high-polluting fossil fuel vehicle with a Tesla. “This new policy threatens to move Hong Kong backwards.”
This new decision will surely discourage many EV buyers, but Hong Kong is a home has some wealthy buyers, who are so obsessed with their Tesla Inc (NASDAQ:TSLA) electric car that they do not pay much attention to the price.