Editorial | EVs in Hong Kong must compete on their own merits

The policy change confirmed by Financial Secretary Paul Chan Mo-po during his budget speech on Wednesday signalled that the city’s EV market has matured. When the scheme was launched in 2018, electric cars were a niche luxury. Now about 70 per cent of all newly registered private cars in Hong Kong are electric.

Chan said advanced technology, ample supply and falling prices negate the argument for subsidies. Despite an easing of the city’s fiscal deficit, it is hard to justify providing a HK$172,500 (US$22,000) tax break for a product that has secured local dominance. Some critics have argued that the move is too abrupt and risks stalling the city’s goal of ceasing new registrations of petrol-powered and hybrid private cars by 2035 on the way to achieving carbon neutrality before 2050. Dealers are already pivoting towards hybrids in anticipation of a drop in EV sales.

While these concerns are valid, they must be balanced against the broader and older policy objective of a high first registration tax. Rather than just a revenue stream, it is a vital tool for curbing traffic congestion and encouraging the use of public transport. EVs may help save the environment but they could prove to be too much of a good thing for busy roads.

The government’s green ambitions are far from over. Full tax waivers for electric commercial vehicles and motorcycles will continue until 2028, and aggressive conversions of petrol stations into fast-charging hubs shift the emphasis from EV buying to usage. If banishing conventional fuel-propelled cars from Hong Kong streets is to succeed, EVs must compete on their own merits. Transitioning from incentives to market-driven growth is a necessary step.

Infrastructure and the vehicles themselves, rather than taxpayer dollars, must now take the wheel and drive the future of Hong Kong transport.