Sales of electric vehicles (EVs) in Singapore are estimated to grow by 170% y-o-y to reach an annual sales volume of 475 units in 2021, says Fitch Solutions in a June 7 report.

The figure represents a “strong expansion” following a 73% y-o-y drop in EV sales in 2020.

Post-2021, the macro and industry research firm expects EV sales to grow at an average annual rate of 40% y-o-y from 2022 to 2030 to reach an annual sales volume high of just under 7,000 units and an EV-penetration rate of around 9.6% of total vehicle sales.

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The team has also estimated that Singapore’s EV fleet will increase from 1,769 units in 2020 to just under 10,000 units by the end of 2025.

“We believe that as Singapore's automotive sales market enters its growth cycle (vehicle replacement cycle), the wealthy population and the government will prioritise the purchase of electric vehicles (EVs) over internal combustion-engined (ICE) vehicles,” writes the macro and industry research firm, who expects the government to accelerate the development of its nascent EV-charging infrastructure to motivate consumers and fleet operators to make the shift to EVs.

“That said, we note that there is room for stronger growth given the wealthy population, especially as the cost of EVs moderates in Singapore and as the cost of internal combustion engine (ICE)-vehicle ownership rises,” it adds.

As Singapore’s vehicle sales market is said to be cyclical due to the high cost of vehicles in the city-state, as well as the bidding process of obtaining a certificate of entitlement (COE), the team at Fitch Solutions believes that the growth cycle of Singapore’s new vehicle sales market will start in 2021 and enter full force over 2022.

During this period, the adoption of EVs is likely to accelerate, especially if the Singapore government has the necessary EV charging infrastructure in place, and if it reduces the cost of EVs.

To this end, Fitch’s infrastructure team says it expects the government to accelerate the building of EV charging stations over 2021 to 2025 as the government aims to phase out all ICEs and have all vehicles run on cleaner energy by 2040.

Under the Singapore Green Plan, the Singapore government has planned to install some 60,000 EV charging points with eight EV-ready towns by 2025, which, according to the team at Fitch, is a “highly ambitious target” considering the republic only has 1,600 charging points at present.

“This translates into around 1 charging point per EV in Singapore's vehicle fleet, while currently, this ratio is somewhat supportive of the current EV fleet, the charging network will have to expand geographically and in the number of charging points in order to attract more consumers to EVs and to make EVs more usable over the entire city-state,” writes the team.

Cover photo: Bloomberg