Have you felt it: A surge of technological advancement around Hong Kong that seems to happen on an annual basis? Every time you turn around, it seems like there’s an exciting change to some aspect of life in Hong Kong as the result of a new technology being implemented here. To be sure, there are plenty of things that a person can say about the Hong Kong government, but that they are not making use of innovative new technology is not one of them. Every year we see part of the city’s budget focused on technological advancement in certain aspects of Hong Kong society.
For example, 2018’s annual budget has recently been announced, and there are some major incentives included for drivers in Hong Kong that may be in the market for an electric car. Here, Kwiksure examines the specifics of the new budget as they relate to electric vehicles in Hong Kong, and let you know what this could mean for your car insurance.
Electric cars in Hong Kong
Hong Kong is no stranger to electric vehicles, but their proliferation across the city is a somewhat recent development. As recently as 2014, the number of registered electric vehicles (EV) was as low as 782 or 0.1% of the total number of vehicles on the road. By 2016, the number of private EVs in Hong Kong grew to 5,042, and the city has been seeing an annual EV registration growth rate of around 3%.
This didn’t happen totally organically, though. The local government has provided financial incentives to those who choose to purchase EVs in the form of tax exemptions for vehicle registration, tax deductions for businesses adding EVs to their fleets, the establishment of funds for public transport companies using EVs, and the expansion of charging station infrastructure.
Towards the end of 2017, however, there were many headlines that appeared in local newspapers and websites lamenting recent developments regarding the Hong Kong government’s handling of electric vehicles. This is because some of the effective incentives for individual purchasers of electric vehicles had been slashed in March of 2017, as a cap of HKD 97,500 was placed on tax exemption for new EV purchases. (To exemplify why this is such a big deal, the purchase of a new HKD 600,000 Tesla will result in a tax of about HKD 487,500.)
It seemed at the time that not much was being done to encourage EV purchases moving forward. It had seemed that Hong Kong may have been leaving EVs behind. As a result, sales of electric vehicles actually fell in the second half of 2017, causing manufacturers, dealerships, and EV enthusiasts to worry.
The 2018 Hong Kong budget
Fortunately, those woeful over the potential loss of EV incentives now have reason to brighten up. In February of 2018, the Hong Kong government announced their new budget, and it contains a brand new program aims to directly replacing internal combustion engine vehicles on Hong Kong roads into electric vehicles.
Owners of non-electric vehicles can now take advantage of a whopping HKD 250,000 tax break when they scrap their current vehicle and subsequently replace it with an approved EV of their choice! The rules are as follows:
HKD 250,000 in tax breaks are given on first registration tax of private vehicles worth HKD 377,500 or less.
Buyers must own a non-electric vehicle currently to register for this program, and must have it scrapped to participate.
The vehicle that is scrapped must have been owned by the participating owner for three consecutive years or more.
The car that is scrapped must be at least six years old in total.
While the government has acknowledged that it cannot predict how effective this new plan will be at getting drivers to switch over to electric vehicles, it is still a step in the right direction in the eyes of many.
What this means for you and your car insurance
There are actually a number of ways that replacing old non-electric vehicles on the road with EVs and upping the number of EVs in Hong Kong overall may have on either your insurance or the insurance industry as a whole.
First, if you have a car that is currently old and of low value, upgrading to an electric vehicle could result in higher insurance premiums. This is because the value of the car insured could now be quite a bit higher than the previous vehicle you owned. As this makes insuring the vehicle riskier to the insurance provider, they may now charge higher premiums to compensate for the risk.
On the other hand, depending on how old your current vehicle is, its safety standards may be significantly lower than those seen in new electric cars today. If the difference in the safety features between the vehicles in significant enough, this may result in lower premiums than you might expect. The previous two points can seem to be a bit of a wash when it comes to your insurance premiums, but it’s really the specific vehicles and drivers involved that will dictate where an insurer places a new EVs car insurance premiums.
Finally, it’s important to consider that the data that insurance providers have on electric vehicles is miniscule in comparison to that of internal combustion engine vehicles. For this reason, replacing traditional vehicles with electric vehicles on a large scale is bound to provide insurers with the knowledge they need to make the best decisions regarding the risks of EVs, and associated premiums.
Get in touch
If you have read everything above and you still have questions about the new electric vehicle programs here in Hong Kong, or just questions about insuring your vehicle in general, please feel free to contact the Hong Kong car insurance experts at Kwiksure! Our agents are here to provide you with all of the answers you are looking for. Additionally, they can provide you with a plan comparison of policies from the top motor insurance providers in Hong Kong, and give you a free price quote.
Contact us today and find out how we can help you find the best car insurance policy for your specific needs.