Would tax exemption make Tesla’s Model S affordable?
Beginning next year, it will be more convenient to use your electric vehicles (EV) in Kuala Lumpur thanks to the installation of 300 charging stations in the city centre in shopping centres, hypermarts and other high traffic areas.
The charging stations, to be installed in the first quarter of 2016, will be funded by Malaysian Electricity Supply Industries Trust Account, said Greentech Malaysia’s Vice-President for Green Catalyst Mohd Azrin Mohd Ali, who is leading the electric vehicle programme.
The installation addresses one of the two pertinent issues that is stifling the growth of electric vehicle ownership in Malaysia – infrastructure and price.
According to the Road Transport Department (RTD)’s Director of Automotive Engineering Dato’ Haji Mohamad Dalib, despite the growth in the registration of electric vehicles, there has been a serious delay in the installation of charging stations. “As far as the RTD is concerned, we have been fully prepared in terms of regulations and registrations for electric vehicles, but what is severely lacking is the infrastructure.”
Mohamad added that for registration and road tax purposes, RTD converts kilowatt hour of the battery capacity in electric cars to engine displacement (the total volume of the cylinders of the engine which can be filled with a fuel/air mixture, measured in cubic centimetres or cc). This means electric cars typically pay the minimum in road tax of RM50.
Dato’ Haji Mohamad Dalib demonstrating how easy it is to charge an EV.
Chicken and egg situation
Mohd Azrin pointed out that Greentech has indeed been working on a policy for electric vehicles which includes tax rebates to help make electric cars more affordable. “At present, the number of electric cars on the road is negligible and installing charging stations, despite the lack of volume, is very much a chicken and egg situation – laying the infrastructure before volume.”
He hopes that the visibility of the charging stations in areas such as shopping complexes, hypermarts and rest areas on highways would increase electric vehicle awareness. People need to know that using them is not complicated as electric cars can be charged anywhere, added Mohd Azrin.
Greentech has a target of 20,000 charging stations by 2020 and these stations will be a private–public initiative involving local authorities, public utility companies and manufacturers. “We studying ways to make these station viable business ventures.”
The industry challenge here is getting private industries and even the manufacturers of electric vehicles themselves to invest ahead of demand to ensure that infrastructure is readily available when demand matures. This removes the burden from the government when it comes to funding the installation of these stations.
An excellent example would be Tesla Motor Inc, which has provided 554 free Superchargers stations strategically located across the United States with multiple superchargers that charge its Model S in minutes. These stations are also conveniently located near restaurants, shopping centres, and WiFi hot spots.
With the setting up of the infrastructure, another huge hurdle remains – the pricing of electric vehicles. Mohd Azrin stressed the need for tax exemptions for electric vehicles to attract consumer buy-in.
No matter how good the electric car is for the environment, cost in always a determining factor. Difference in costs can be as high as 63%, causing many to argue that the high purchase cost of an electric vehicle will place consumers on a spending disadvantage that they may never recover from, despite cheaper mileage and up to 20% cheaper maintenance.
According to Mohd Azrin, the government will be moved to look at tax exemption if we are able to attract manufacturers to set up plants here or go into partnership with local manufacturers. However, manufacturers would consider the market size before making the move to invest here.
Currently, China’s Beijing Auto International Cooperation (BAIC), the country’s top and world’s second biggest electric vehicle manufacturer, is the first to set base here with an assembly plant in Gurun, Kedah, in collaboration with a Malaysian partner, Amber Dual Sdn Bhd. While the prototype electric vehicle developed in Gurun is expected to be ready next month, production is only expected to begin in July 2016.
The Gurun plant, built at the cost of between RM200 million and RM300 million, will also serve as a marketing centre for BAIC vehicles not only for the Malaysian market but also for Southeast Asia.