Why Hong Kong Consumers Are No Longer Buying Teslas
It appears that Tesla is beginning to lose one of its biggest markets in the world as sales in Hong Kong have reportedly waned in recent months.
The local transport department’s data for April shows there have not been any new Tesla model registrations for the month. In comparison, there were 2,939 first-time Tesla registrations in March.
According to Quartz, the Hong Kong government’s recent removal of the tax breaks for electric-vehicle (EV) buyers have made a huge impact in the sudden drop in customers.
The waiver, which covered first registrations for owners who purchase electric cars, sparked a threefold increase from 2014 figures in new registrations for EVs in Hong Kong in 2015.
At the time, the Hong Kong government was pushing for electric vehicles to help minimize pollution. Companies which buy electric vehicles are also given tax deductions.
While first-time registrations are not exactly sales figures, they can serve as a barometer for newly purchased vehicles.
Under the new policy, which went into effect on April 1, the tax waiver is capped at HKD $97,500 ($12,500) on private EVs, which is only applicable to first-time owners.
With the change, a Tesla Model S 60 which formerly costs HKD $570,000 ($72,900) is now priced HKD $925, 500 ($118,400).
Prospective buyers who plan to wait it out will be in for a long wait as the ruling is expected to last for at least a full year.
As of May, there are 11,004 EVs (privately owned and public transport vehicles) in use in Hong Kong, based on figures from the city’s Environmental Protection Department.
In a statement released to Quartz, a rep from Tesla downplayed the significance of the policy change, noting that the success of their business did not “rely on” government policies. The company also believed that Hong Kong market would remain to be “very strong”:
“Hong Kong remains a significant market for Tesla and we continue to sell cars there each quarter. When the Hong Kong Government reduced the tax exemption for electric vehicles and increased the cost of our cars by nearly 100%, it’s to be expected that demand will be impacted in the period immediately following the change, particularly because of the large number who bought just prior to the change being implemented.”
In the past, Tesla CEO Elon Musk has previously commended the city’s tax waiver for EVs, which he dubbed as “excellent.”
But while there will not be many new Hong Kong customers in a while, Tesla is still on track on expanding its productions and sales in mainland China.
Meanwhile, China is shaping to be a huge market for electric vehicles as the government continues its combat air pollution.
Compared to America’s 159,000 new EV registrations in 2016, China registered an impressive 352,000 new EVs in the same year.
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