After declaring its ambition to phase out Internal Combustion Engine (ICE) vehicles by 2040, Singapore will make electric vehicles more attractive from next year (2021).

In his Budget speech delivered on 18 February 2020, Deputy Prime Minister Heng Swee Keat laid out a number of measures to do this. "Our vision is to phase out ICE and have vehicles run on cleaner energy by 2040," Mr. Heng said, adding that this goal is for "both public health and climate change reasons".

First, the Vehicular Emissions Scheme, which metes out tax rebates and surcharges based on a vehicle's emission levels, will be extended to light commercial vehicles.

Second, the EV Early Adoption Incentive will be rolled out, offering a rebate of up to 45% on the Addition Regristration Fee for EVs purchased from 2021 to 2023. The rebate will be capped at $20,000 per vehicle. The Land Transport Authority has revealed that this initiative will cost the government an estimated $71 million over the next three years, but will lower the upfront cost of an EV by an average of 11%.

Third, the road tax for EVs and some hybrids will be revised to be less punitive. The revised road tax schedule will comprise of a 'flat component' of $700 a year, phased in over a three-year period, while the existing variable component tiered according to power rating will be revised to better account for improvements in vehicle efficiency.

Fourth, Singapore will expand the EV charging infrastructure significantly from 1,600 points now to 28,000 acorss public carparks around the island by 2030, with the help of the private sector.

But as excise duty from fuel sales contributes around $1 billion a year, Mr. Heng said the Government will introduce a lump sum tax for EVs from 2021, starting at $100, then $200 in 2022, and $350 from 2023 onwards.

"Total road tax, after the revised in methodology and the new lump sum tax, will be higher for some EV models," Mr. Heng said. "However, EV buyers can expect to enjoy substantial savings because of the significant EV Early Adoption Incentive." Mr. Heng said the excise duty on fuel is a form of mileage tax to discourage indiscriminate usage, which will have an impact on pollution and congestion.

Explaining the changes in policy, Mr. Heng explained, "Here we are placing a significant bet on EVs, and leaning policy in that direction because it is the most promising technology. It also requires a significant increase in demand to justify the infrastructure investment. This is a significant undertaking involving multiple agencies."