Increased rebates and surcharges under VES from 2021

The Land Transport Authority (LTA) has announced that the current Vehicular Emissions Scheme (VES) for new cars, taxis, and imported used cars will be enhanced with increased rebates and higher surcharges.

The enhanced scheme will take effect on 1 January 2021, when the current VES expires at the end of this year, and last till 31 December 2022.

From 1 January 2021, the rebates for vehicles in both Bands A1 and A2 will be increased by $5,000 for cars, and $7,500 for taxis. This means a car in Band A1 will enjoy a $25,000 rebate instead of $20,000, and a car in Band A2 will enjoy a $15,000 rebate instead of $10,000.

With the enhanced VES, coupled with the Electric Vehicle Early Adoption Incentive commencing on 1 January 2021, buyers will be able to enjoy combined cost savings of up to $45,000 when they purchase a new fully electric car, and up to $57,500 for a new fully electric taxi.

The higher savings will encourage electric vehicle adoption by further narrowing the upfront cost gap between electric cars and their internal combustion equivalents.

Also announced are new surcharges for vehicles in both Bands C1 and C2. The new surcharge will be implemented only from 1 July 2021, in order to give the market time to adjust, and will be increased by $5,000 for cars, and $7,500 for taxis.

This means that a car in Band C1 will incur a surcharge of $15,000 instead of $10,000, and a car in Band C2 will incur a surcharge of $25,000 instead of $20,000.

There will be no change in the pollutant criteria for each VES band for the duration of the enhanced scheme.

The VES, which came into effect on 1 January 2018, is aimed at encouraging buyers to choose car models with lower emissions across five pollutants. This helps reduce carbon emissions and improve ambient air quality.

LTA states that the scheme has been effective in encouraging the purchase of cleaner car models. Between the third quarter of 2018 and the first quarter of 2020, the number of new cars registered in Certificate of Entitlement Categories A and B that qualify for rebates under VES Bands A1 and A2 increased by around 60%, while the number of new cars subject to surcharges under VES Bands C1 and C2 fell by around 20%.

The National Enviroment Agency and LTA regularly engage the vehicle industry on policies to reduce vehicular emissions and improve ambient air quality. To this end, NEA will be contacting the industry in due course for consultations on the possibility of tightening VES band thresholds in future.

Band	Current rebate / surcharge for cars	Increased rebate / surcharge
A1	-$20,000	-$25,000 *
A2	-$10,000	-$15,000 *
B	0	0
C1	+$10,000	+$15,000 ^
C2	+$20,000	+$25,000 ^

*With effect from 1 January 2021
^With effect from 1 July 2021