Fuel-efficient cars worth the higher price: Study

Pump savings of $540 over five years; rebates for such cars fuel good returns
Christopher Tan Straits Times 26 Feb 13;

FUEL-EFFICIENT cars are generally costlier than less economical models but the potential savings at the pumps make them worth the higher purchase price, an academic paper has concluded.

Buyers tend to fork out 0.6 per cent more for every 10 per cent improvement in efficiency, the study by two economists from the Ministry of Trade and Industry found.

But this is cancelled out by the savings over five years of driving with an annual average mileage of 19,100km, which works out to about $540 in real terms.

The paper, by senior economists Kenny Goh and Huang Jianyun of the ministry's economics division, also suggested that buyers would be given a strong incentive to switch to fuel-efficient models by the new Carbon Emissions-based Vehicle Scheme (CEVS). This programme, which kicked in last month, grants rebates of up to $20,000 for cars that emit no more than 160g/km of carbon dioxide.

Using a statistical model that filters out various other attributes that might influence a vehicle's price, the economists found that the CEVS boosts the returns on investing in a fuel-efficient car by almost 10 times.

The paper, entitled The Costs And Benefits Of Fuel-Efficient Cars: How High Are The Returns?, was released last Friday.

Its authors said the views expressed were their own and "do not necessarily reflect those of the Ministry of Trade and Industry or the Government of Singapore".

Motor industry players have noticed that buyers are becoming more concerned about fuel efficiency. They say one reason is rising pump prices. The cheapest petrol is now $2.20 a litre before discount - 40 per cent higher than four years ago.

Motor Traders Association vice-president Glenn Tan said: "Now that a car costs so much, people have become more conscious of running costs. Every little bit contributes to total ownership cost."

The new fuel economy label displayed on all showroom cars - which became mandatory last month - has also helped raised consumer awareness. It not only states the fuel consumption of the vehicle but also rates its fuel efficiency against rivals.

Car dealers said while the CEVS has given buyers an incentive to opt for fuel-efficient cars, the rebate of up to $20,000 is actually smaller in real life. This is because the tax cut translates to a smaller scrap value when the vehicle is finally deregistered.

Mr Ron Lim, general manager of Nissan agent Tan Chong Motor, said the scheme had also contributed to "more and more cars" crowding the small-car certificate of entitlement category.

Smaller vehicles tend to pollute less and many stand to benefit from the scheme. "Ironically, this will only push up prices, and whatever tax rebate one gets is eventually thrown back into the system," said Mr Lim.

Only three electric cars on the road
Straits Times 26 Feb 13;

DESPITE the hype about electric cars, only three were on Singapore's roads as of last month, official registration data has revealed.

A quirky Corbin Sparrow three-wheeler, a Tesla sports car and a retrofitted BMW flew the flag for the zero-emission fleet - out of Singapore's total passenger car population of 618,000.

Battery-powered vehicles arrived in Singapore two years ago, but motor traders cite high costs and the unavailability of charging infrastructure as the main reasons for the near-zero take-up by consumers. To date, four manufacturers have brought in electric models for a test-bedding exercise led by the Energy Market Authority (EMA).

Test-bed cars are exempt from certificate of entitlement (COE) premiums and other car taxes, but can be registered only by companies, institutes and government agencies. The exercise will log data such as daily mileage, destinations and charging patterns.

Out of an intended test fleet of about 90 cars, the EMA said 71 have already been put on the road by various test-bed participants. They are 23 Mitsubishi i-MiEV subcompact hatchbacks, 25 Nissan Leaf compact hatchbacks, 10 Smart micro-minis and 13 Renault Fluence ZEs - none of which is included in the official registration data.

The authority said it has another 12 applications for the test- bed, which started in mid-2011 to gauge the viability of electric cars in the local environment.

Forty-seven charging stations have been set up here, with three capable of fast charges of under an hour. Normal charges can take eight hours.

The EMA said the average daily distance clocked by the test fleet was 41km - shorter than the average distance of 55km clocked by motorists in fuel-powered cars.

Trial participants have had a generally positive experience.

Company director Y.Y. Ke, 57, who has driven the i-MiEV for about 14 months, said: "People who have complained about range anxiety don't use the car enough and don't know its characteristics. My longest drive on a single charge was 120km and I still had about 10 per cent left in it."

Engineer Eu Pui San, 56, has clocked 19,000km on an i-MiEV and found it dependable.

"There are no mechanical or electrical issues, but you must plan your trips," he said.

Like others, Mr Eu said electric cars are still too expensive for most consumers.

For instance, the Renault Fluence ZE costs around $89,000 under the test-bed scheme, but almost $200,000 if registered as a normal car. The estimated price includes COE and carbon rebates. The i-MiEV and Nissan Leaf are expected to be around $200,000 if registered outside the test-bed.

Under the Carbon Emissions- based Vehicle Scheme, most electric cars qualify for the maximum $20,000 tax rebate. But Mr Eu, a senior vice-president of Senoko Energy, said this is insufficient to make electric vehicles affordable for ordinary consumers. "Perhaps the batteries - which account for more than half the cost of an electric car - can be excluded in our tax computation," he said.

Meanwhile, it is not clear if a plan to attract more new-technology vehicles to be test-bedded here has gained traction since it was announced in 2010.

The tax-free scheme set aside for more than 1,200 such vehicles - which was expected to cost the Government $75 million in revenue - is administered by the Economic Development Board. The EDB would not comment when asked how many cars have been granted test status under this scheme.

CHRISTOPHER TAN