Tesla to be knocked by Hong Kong EV tax changes
The Hong Kong government has announced that it will end full exemptions from first registration tax on electric cars in the region. Financial Secretary Paul Chan Mo-po announced that discounts on the tax would be capped at HKD97,500, increasing the price of the Tesla Model S by over HKD300,000 ($12,564). The tax will have a particular impact on Tesla, which has an 80% share of the EV market in Hong Kong. As of January 2017, 7,434 electric vehicles were registered in Hong Kong, compared to 100 at the end of 2010.
Aside from regulations preventing them from releasing some of its in-car features, Tesla and Elon Musk love Hong Kong. The CEO was in the City earlier this year for a special event for Tesla owners and he said that Hong Kong is a “beacon city for electric vehicles”.

The California-based automaker now dominates the electric vehicle market in the global city with a 80% market share of Hong Kong’s 5,800 EVs as of this July. A 60-fold increase in electric vehicles, mostly all-electric, since 2010.

Germany now says that the local government is playing favorite and it wants to dislodge Tesla has the leading electric vehicle brand in Hong Kong.

All-electric cars imported in the city benefit from a 100% waiver on first-registration taxes, which can be pretty steep in Hong Kong resulting in an edge for electric vehicles. Plug-in hybrids do not benefit from the same tax exemption.

Now German automakers do make some all-electric vehicles, like the BMW i3 or the Volkswagen e-Golf, which do benefit from tax exemption, but they currently mostly offer plug-in hybrid and claim its unfair that they are not exempt.

The German Consul General in Hong Kong, Nikolaus Graf Lambsdorff, is even getting involved. He commented to South China Morning Post:

“In the end it should be the consumer that should decide who is successful in the market and who is not. But the government has to set the right framework,” Lambsdorff said. “It’s happening. Maybe a bit slow, but Hong Kong is moving in the right direction.”

Kevin Coon, vice-president of BMW Group’s Hong Kong, added that the fact that plug-in hybrids are not included “isn’t much of a level playing field”.

Additionally, the European Chamber of Commerce Automotive Council has written to Hong Kong’s Environmental Protection Department to lobby for waivers for plug-in hybrids.

While most agree that plug-in hybrids should receive incentives proportionate to their impact on air pollution in the city, it’s hardly unfair to the German automakers since they can and are making all-electric vehicles – it’s just that plug-in hybrids are still a bigger part of their business.

Edwin Lee King-yan of the EV advocacy group Charged Hong Kong said incentives should be provided to hybrids, but “zero tax should be left for zero emissions vehicles only.”

Either way, the tax waiver on all-electric vehicles is set to end during the second quarter 2017, but the government is currently discussing the possibility to renew it.