Assoc Prof Jamus Jerome Lim (Sengkang): The existing vehicle quota system of Vehicle Quota System (VQS) maintains COEs that last for 10 years for the first instance and can be renewed for either five- or 10-year periods thereafter. At the inception of the VQS, the 10-year duration was chosen because it will align with the existing limit of the preferential additional registration fee or part rebate. This duration is somewhat arbitrary.
Although one could argue that back in 1990, they were also broadly aligned with factors driving vehicle turnover, such as safety, efficiency emissions and maintenance costs. With new electric vehicles (EVs), however, these factors are likely to be dominated by a wholly different consideration. The lifespan of the EV battery. At present, the warranty on EV batteries for most manufacturers is set at eight years, or 160,000 kilometres.
This is consistent with the practice of designating battery end of life at 70% of the maximum charge. Since the cost of replacing a battery outside of the warranty is prohibitively expensive; estimated at around a third of the cost of the actual vehicle, many would consider this an opportune time to replace the car altogether. We can thus regard eight years as a reasonable lower bound.
But research suggests that retiring the battery so early, severely under-utilises it and, given the environmental cost of battery manufacture, undermines the EVs sustainability proposition. Indeed, with reasonable use, EV batteries could last somewhere between 15 and 20 years before requiring replacement. Industry experts tend to place the equivalent mileage at closer to at least 300 and 20,000 kilometres – double that of the standard warranty distance. And even if the battery were changed only once at eight years, it would make sense to stretch out the new battery another eight.
If so, this will afford an equivalent upper bound that amounts to 16 years. There is much uncertainty over the genuine economic and technical lifespan of an EV. In light of this, the existing practice of the Ministry, which disallows the repeated renewal of shorter term COEs, should also be eliminated to preserve the maximum flexibility for EV drivers to extend the use of an environmentally friendly car.
The claim that returning short-term COEs into the bidding pool preserves equity between existing and prospective owners of cars, has never made much sense to me, since it applies with equal force to longer-term COEs. But insisting on this practice makes even less sense for vehicles that will otherwise endure even longer than the typical internal combustion engine (ICE) equivalents.
In summary, I propose that the Ministry consider revision in the standard COE duration to 16 years, especially after 2030, when the pure ICE COEs will no longer be issued. For those who desire a shorter term for renewals, much like the present five-year COE, and eight-year duration will also coincide with one battery lifecycle.
The Senior Minister of State for Transport (Dr Amy Khor Lean Suan): To Assoc Prof Jamus Lim’s suggestion to change the COE duration for EVs, I should highlight that the current 10-year duration is not based on the lifespan of vehicles. We implemented a 10-year duration as part of our vehicle quota system for greater equity, so that motorists do not own a car in perpetuity at the expense of future prospective owners.
Should vehicle owners, including EV owners, decide to deregister their vehicles at any point, they will be able to get a refund of the unused portion of the COE, as well as Preferential Additional Registration Fee (PARF) rebates. Having different COE validity periods across powertrains will make the COE system unnecessarily complex. Vehicle technologies will continue to change. So, it is not sensible to tie our COE validity periods to specific technologies, let alone the uncertainty of lifespans of EV batteries, as Assoc Prof Lim has noted.
The Chairman: We have time for two more clarifications. Assoc Prof Jamus Lim.
Assoc Prof Jamus Jerome Lim: Sir, I understand that the 10-year COE duration is not currently tied to the life cycle of the vehicle, but as I explained in my cut, then-Minister for Communications and Information Yeo Ning Hong had said that it was tied to the limit for Preferential Additional Registration Fee (PARF) benefits. But my point is actually that this duration is arbitrary and we needlessly tie ourselves to a legacy duration that may be misaligned with what will be reasonable in terms of a key component of an EV, which is the battery.
Senior Minister of State Amy Khor has indicated that a system of multiple COE durations could become unwieldy. Although, of course, now we seem to manage a two-duration system with no issues. But based on what MOT has already announced, it will anyhow phase out the issuance of internal combustion engine (ICE)-COE starting in 2030 and the local fleet will be all EV by 2040. If so, would a change in duration not be considered at this later point in the future?
Dr Amy Khor Lean Suan: As I have noted in my reply and as the learned Assoc Prof has also said, definitely the validity period of the COE is not tied to the lifespan of the vehicle. When we implemented this, we put a validity period of 10 years. Actually, as I have said, it is really for greater equity, so that motorist do not own a car in perpetuity at the expense of future car owners.
So, this 10-year period really is a good balance between certainty for existing owners and a good chance, a chance for somebody who may wish to purchase a car. And it also happens to tie-in with the time limit for the PARF benefits, which is actually, to encourage vehicle fleet renewal in Singapore, is still relevant.
And as I have said, we have been using this validity period, monitoring. It has worked well. We will continue to, as we have done, take in feedback from stakeholders, interested parties and monitor the appropriateness of this validity period.
But having said that, even the two system – 10-year and five-year – the five-year was a concession for owners whose COE was expiring. They did not think that the cars would last for more than five years and we gave a concession for the five-year renewal. But that is only one time. If they renew for five years, they will not be able to renew again. So, the system has not really got multiple COE validity periods.
And as I have said, actually, we are technology agnostic, too, in the sense that technology evolves. We want cleaner energy vehicles, but it does not have to be EV, although at this point in time, EV is the most viable. But technology changes, evolves. In fact, I checked ChatGPT too, lifespan of EV batteries is 10 to 20 years. Warranty, eight years, but some companies are already giving 10 years. So, I think it is not really sensible to tie it to a specific technology.
Ministry of Transport
5 March 2025
https://sprs.parl.gov.sg/search/#/sprs3topic?reportid=budget-2604
Office of the Leader of the Opposition 