SG Budget 2025: Accelerating Clean Living with EV Incentives in Singapore

Singapore's Budget 2025 signifies a pivotal step in the nation's commitment to sustainable living, with a pronounced focus on accelerating electric vehicle (EV) adoption.

This comprehensive strategy addresses both environmental concerns and economic resilience, aiming to transform Singapore's transportation landscape.

In this article, we'll explore the key initiatives introduced in the budget, provide analytical insights, and offer practical guidance for individuals and businesses considering the transition to EVs.

A Comprehensive Strategy for Sustainable Transportation

The transportation sector contributes approximately 15% of Singapore's total carbon emissions. To mitigate this, the government has set an ambitious goal: achieving 100% cleaner energy vehicles by 2040.

Progress is evident, with about one-third of all new cars registered last year being electric, and nearly half being hybrid models. This shift reflects a growing public inclination towards environmentally friendly transportation options.

Targeted Incentives for Heavy Vehicles

While the adoption of electric cars has been encouraging, the transition for heavy vehicles has been slower. Challenges such as limited model availability, higher upfront costs, and insufficient charging infrastructure have impeded progress.

To address these issues, SG Budget 2025 introduces two significant schemes:

1. Heavy Vehicle Zero Emissions Scheme: This initiative offers financial incentives to businesses for purchasing electric heavy vehicles, effectively reducing the initial investment required and making the switch more economically feasible.
2. Electric Heavy Vehicle Charger Grant: Recognising the importance of infrastructure, this grant co-funds the installation of charging stations for heavy vehicles, enhancing the accessibility and convenience of charging facilities.

These measures aim to expedite the decarbonisation of the transport sector, ensuring that even the most substantial emitters have a clear pathway to sustainability.

Enhancing EV Adoption Through Financial Incentives

To further promote EV adoption, the government has extended and adjusted existing incentives:

• Electric Vehicle Early Adoption Incentive (EEAI): This scheme has been extended until December 31, 2025, offering a 45% rebate off the Additional Registration Fee (ARF) for newly registered fully electric cars and taxis, capped at SGD 15,000. This initiative aims to reduce the cost disparity between electric and traditional vehicles, making EVs more accessible to consumers.
• Vehicular Emissions Scheme (VES) Adjustments: In 2025, the VES Band A1 rebate for zero-emission vehicles like EVs remains at SGD 25,000. However, the Band A2 rebate for hybrids and some efficient internal combustion engine vehicles decreases to SGD 2,500, underscoring the government's commitment to prioritising fully electric vehicles.

Infrastructure Development and Industry Collaboration

A robust charging infrastructure is vital for widespread EV adoption. To this end, the government plans to install at least three EV charging points in nearly 2,000 Housing and Development Board (HDB) car parks by 2025.

This will significantly expand the national charging network and improve accessibility for residents.

Meanwhile, in the public transport sector, efforts are underway to electrify the bus fleet, with a target of converting half of the buses to electric by 2030.

This initiative not only reduces emissions but also serves as a model for large-scale EV integration in public transportation.

Industry collaboration further bolsters Singapore's EV ecosystem. The establishment of the Hyundai Motor Group Innovation Centre in Jurong exemplifies this commitment.

This initiative supports EV manufacturing and innovation, creating jobs, and advancing technology within the nation.

Implementing Equitable Usage Charges for EVs

As EV adoption increases, it's essential to establish a fair system ensuring all road users contribute equitably to infrastructure maintenance.

Currently, drivers of internal combustion engine (ICE) vehicles pay fuel excise duties, serving as a form of usage charge.

To address this for EVs, the government has introduced the Additional Flat Component (AFC) of road tax for electric heavy goods vehicles and buses.

Additional Flat Component (AFC) Road Tax for Various Commercial Vehicles

This will be phased in over three years starting from January 2026, with full implementation by January 2028.

Analytical Insights: Navigating the Transition

SG Budget 2025 initiatives aim to transform Singapore's electric vehicle (EV) landscape by targeting both consumers and commercial vehicles.

The government is taking a comprehensive approach to reduce carbon emissions in transportation.

Key actions include:

• Financial Incentives: Lowering costs for consumers to make EVs more appealing.
• Infrastructure Investment: Co-funding charging stations to improve access and ease concerns about charging availability.
• Usage Charges: Introducing fees for EV usage to create sustainable revenue and ensure equity as the vehicle market changes.

Overall, this balanced strategy fosters EV adoption while maintaining economic sustainability.

Practical Steps for Transitioning to Electric Vehicles in Singapore

Transitioning to electric vehicles (EVs) in Singapore involves several practical steps for both individuals and businesses. Here's a guide to assist you in this journey:

1. Research Available Incentives

The Singapore government offers various incentives to encourage EV adoption:

• EV Early Adoption Incentive (EEAI): This scheme provides a rebate of 45% off the Additional Registration Fee (ARF) for newly registered fully electric cars and taxis, capped at SGD 15,000. The EEAI has been extended until December 31, 2025.
• Vehicular Emissions Scheme (VES): Under the VES, electric vehicles may qualify for rebates depending on their emission ratings. For cars registered between January 1, 2021, and December 31, 2022, the Band A1 rebate is SGD 25,000, and the Band A2 rebate is SGD 15,000.

2. Assess Your Driving Needs

Understanding your daily travel patterns is crucial:

• Daily Commutes: If your routine involves short trips within Singapore, most EVs can handle this on a single charge.
• Long-Distance Travel: For trips across the island, consider the availability of charging infrastructure along your routes.

3. Explore Charging Solutions

Charging accessibility is vital:

• Public Charging Stations: Singapore's EV charging infrastructure is expanding steadily. As of the first half of 2024, about 18,000 cars, or 2.7% of the total car population, are electric. EV charging points have been installed in about half of all HDB carparks, or around 1,000 of such carparks.
• Home Charging: Installing a home charger can provide convenience and flexibility.

4. Evaluate Total Cost of Ownership

Consider both upfront and ongoing expenses:

• Purchase Price: While EVs may have a higher initial cost, government incentives can offset this.
• Maintenance and Fuel: EVs generally have lower maintenance costs, and electricity is often cheaper than petrol.

5. Plan for Charging Infrastructure Expansion

Stay informed about infrastructure developments:

• Government Initiatives: The Singapore Green Plan 2030 aims to deploy 60,000 EV charging points nationwide by 2030, ensuring comprehensive coverage across the island.

By following these steps and leveraging available resources, transitioning to an electric vehicle in Singapore can be a practical and environmentally friendly choice.

Singapore's Budget 2025 underscores a national commitment to environmental sustainability and clean living.

By implementing comprehensive measures to promote EV adoption, the government is paving the way for a greener future.

Individuals and businesses alike are encouraged to seize this opportunity, leveraging available incentives and resources to make the transition to electric vehicles.

Together, we can drive towards a cleaner, healthier, and more sustainable Singapore.