Tesla’s Hong Kong dream lives on … in government time lag
January data on new autos shows why Elon Musk had the hots for the city, especially its tax giveaways. But will the fires fade now the perks are gone?
Elon Musk’s love affair with Hong Kong is preserved, like an ant trapped in amber, in the latest data from the city’s government: one in 15 new autos sold was a Tesla sports car. Only four other marques did better, all global giants of the internal combustion engine.
In the nine months ended January 2017, Tesla Inc. sold 1,930 units in Hong Kong, behind only Toyota (8,088), Mercedes-Benz (4,578), Honda (3,824) and BMW (2,818). It also beat Audi, Volkswagen and Porsche, based on the monthly report from the Transport Department, which started disclosing car sales by brand since May.
The disclosure came on the back of Tesla’s record car sales in the first quarter. The company said on Monday it delivered 25,000 vehicles in the first quarter, up 69% from a year earlier.
Hong Kong is a strategic market for Tesla, whose founder and chairman Musk once called the Chinese territory a “beacon city for electric vehicles,” thanks to generous tax waivers the government put in place to spur development of EVs in line with official Beijing policy.
Indeed, China is Tesla’s second-biggest market, behind the US. The company last week brought in Tencent Holdings as a strategic partner, selling the Chinese internet giant a 5% stake for US$1.8 billion.
Still, Tesla’s outsized market share in the city has been a cruel reminder to policymakers that not all EVs are created equal: Chinese rival BYD mustered only one sale from November to January.
And so the great leveler has swung into action. In his latest budget, Financial Secretary Paul Chan Mo-po capped the tax waiver on first registration of EVs to HK$97,500 (US$12,500) with effect from April 1. That would crank up the cost of a Tesla X75D to about HK$1.51 million, or about 77% more than its previous price tag.
The new measure offers a more level-playing field for traditional gasoline-engine carmakers, but it does seem to fly in the face of coordinated national efforts to reduce roadside pollution. On the other hand, rich Hongkongers swapping their trophy Maseratis for a trophy Tesla probably wasn’t what the government had in mind for its EV-revolution. The cap on the tax waiver is really aimed at luxury EVs: a five-door hatchback Nissan Dig-S Green will set you back HK$169,800 after new registration tax, the automaker’s website says.
Roadside pollution levels have generally been falling (or at least not rising, in the case of nitrogen dioxide) thanks to government incentives to get outdated motors off the streets and due to efficiency gains in gasoline-based engines and exhaust systems.
Environmentalists point out that EVs, must get their energy from somewhere, and when the generation mix is tilted toward dirty coal (as it is in Hong Kong’s case) then they can actually become part of the problem.
Beside which, Tesla’s Apple-like charging infrastructure (not for them the plug-in stations of the hoi polloi in their Nissan Leafs) doesn’t really fit the “we’re all sinking into the oceans together” image of the average climate change warrior.
It’s not clear how Tesla’s Hong Kong love affair will pan out when the time warp of government data catches up with reality. If Tesla, despite the huge price adjustment, is just a toy for the super-rich wanting to brag about their green credentials, maybe the violins and roses will continue.