Tax changes hit Hong Kong EVs

This story first appeared in the May issue of EVTalk – CLICK HERE to download the magazine FREE

EVtalk’s sister magazine AutoTalk got the chance recently to visit Hong Kong, where we caught up with former Kiwi vehicle distributor boss Grant Smith, who now runs the region’s Porsche distributor.

Porsche is number eight in the market – an impressive feat – but what is more surprising is that Tesla is the fifth most popular new car brand. It all comes down to tax.

Taxes are a significant factor in the Hong Kong car market. Getting a car on the road is expensive, with a first registration tax of nearly 100%. 

As an example, a 911 Carrera 4S has a base price of NZ$220,000 but by the time tax is added, the overall price rises to NZ$435,000. And the tax applies to all the extras – including service contracts and extended warranties – sold on the car in the first six months.

That means only the rich can afford vehicles and it leads to an unusual model mix. Toyota leads the market because it dominates taxis and working vehicles but second in 2016 was Mercedes-Benz followed by BMW, Honda and then Tesla.

The performance of Tesla was largely down to the Hong Kong Government removing the sales tax for electric vehicles.

That rule ended in March and electric cars are now subject to the same high tax with a comparatively small NZ$30,000 government incentive. High Tesla sales for the first quarter are likely to slump now.
Smith is disappointed the tax break is gone – as it would have made the brand’s Mission-E electric model massively appealing when it launches in 2019.

“If it had stayed the same we could have launched the Mission E for under HK$1 million dollars (NZ$180,000),” he says.

“That was a huge advantage for us but that’s now changed.”
But he believes the model will still do well.
“The people of Hong Kong love electric cars,” he says.
“Charging stations are everywhere in Hong Kong – they probably have the
best charging infrastructure in the world. Every mall you go to, every carpark would have ten Tesla charging stations.

“That will be part of our strategy as well when we launch Mission E in Hong Kong, to put Porsche charging stations in at major locations to support our cars.”