Tesla Model S owner protests Singapore's carbon emissions surcharge

Tesla owner protests Singapore's carbon emissions surcharge
Tesla owner protests Singapore's carbon emissions surcharge   

Buying a Tesla will get you green kudos in plenty of places but not Singapore, where the carbon emissions surcharge slapped on a Tesla has caught the attention of the auto-maker's founder Elon Musk.

Joe Nguyen imported a used Tesla Model S P85 from Hong Kong in July 2015, hoping to have the first Tesla vehicle to hit Singapore's roads. Little did he know he was at the start of a seven-month regulatory ordeal, at the end of which he'd pay a 15,000 Singapore dollar ($10,850) carbon emissions surcharge on a vehicle that does not even have a tailpipe.

VICOM, a private vehicle inspection provider that tested the Tesla for Singapore's transport authority, found that Nguyen's 2014 Model S had an equivalent CO2 emission of 222g per kilometer. The emissions were calculated using a "grid emissions factor" that puts a value on the emissions created by energy use - in the Tesla's case, when it converts electricity into power.

Nguyen, who is vice president of an Internet analytics firm, was outraged that an electric vehicle attracted an emissions surcharge.

"Give me a surcharge for my high use of electricity in my utilities bill, but don't take my money for the wrong reasons," Nguyen told CNBC in an interview.

He argued that one of the tests used by Singapore's Land Transport Authority (LTA), set out under its Carbon Emissions-based Vehicle Scheme (CEVS), was flawed.

"There is absolutely zero CO2 emissions generated by my car or any electric vehicle. The CEVS scheme is meant to evaluate cars with internal combustion engines, which includes hybrids," Nguyen, who graduated from Princeton University with a mechanical engineering degree, said.

Singapore's CEVS aims to incentivize consumers to purchase lower carbon-emitting vehicles by offering up to S$30,000 worth of rebates for vehicles with low carbon emissions, and setting up to S$30,000 in surcharges for higher carbon-emitting vehicles.

The CEVS surcharges and rebates are set based on United Nations standards on how to measure the amount of electricity cars consume, rather than standards set by the U.S. Environmental Protection Agency (EPA).

Under the UN standards, the Model S uses 444 watt-hours per kilometer (Wh/km), while the EPA standard puts it at 237.5 Wh/km, Nguyen said.

An LTA spokeswoman told CNBC that the same grid emissions factor was then applied to the electricity consumption of all electric vehicles.

"This is to account for CO2 emissions during the electricity generation process, even if there are no tail-pipe emissions," she said.

This meant that under the higher, UN standard usage reading, the Telsa generated a level of emissions that put it in a surcharge band as set by the CEVS.

The LTA spokeswoman said that Nguyen's Tesla is not the first fully electric vehicle in Singapore to have the grid emission factor applied to it, and that in July 2014 a Peugeot Ion won a rebate of S$20,000 ($14,400) under the same test. It was the highest CEVS rebate available at the time.

The spokeswoman said Nguyen's long wait for official approval to drive the car in Singapore was due to the fact that the agency had not previously tested a Tesla.

Consumer reports top auto picks
Consumer reports top auto picks   

But Nguyen's complaints grabbed the attention of Tesla chief executive Elon Musk, who replied to a tweet about the LTA's decision on Friday to say that he had been in touch with Singapore's Prime Minister Lee Hsien Loong about the issue. Lee told Musk he would "investigate the situation," the Tesla boss said.

Lee had met Musk in San Francisco during the PM's week-long trip to the U.S. in February, and even enjoyed a test ride in the Tesla Model S P90D, according to Lee's official Facebook page.

Tesla, which has a presence in Japan, China and Hong Kong, exited Singapore in 2011.

According to a spokesperson in Singapore's Economic Development Board (EDB), Tesla had requested support from the country's Technology Innovation and Development Scheme (TIDES), which is jointly administered by EDB and LTA. The scheme provides a waiver of vehicular taxes and is "intended to support companies that undertake test-bedding and R&D of cutting-edge transport at technologies."

Tesla's request was declined.

The scheme was "not applicable to automotive manufacturers that are only interested in the commercial sale of its cars in Singapore," the EDB spokesperson said to CNBC.

A Tesla spokesman said the company was in close contact with LTA and was "working with them to bring Tesla vehicles to Singapore."

"Tesla is on a mission to accelerate the world's transition to sustainable transportation and bringing Tesla vehicles to new markets is part of that," the spokesman added.

The cars attract a range of tax rebates and incentives in the U.S. where they're made, and in several other countries including Hong Kong, where the Model S can be registered tax-free and is eligible reduced annual licensing fees.

As for Nguyen, it's been an expensive and frustrating process.

The vehicle itself cost him S$93,000 ($67,200), while customs duty and a goods and services tax added a further S$27,000 ($19,500). On top of those expenses, Nguyen paid S$215,000 ($155,300) in registration fees, road taxes, the certificate of entitlement (COE) that gives him the right to use the car in Singapore, vehicle testing fees and the carbon emissions surcharge.

Having had his Model S since July, he was finally legally able to drive the car last month and believes the trouble he went through for the Tesla was worth it.

"The Tesla is demonstrative of the future of automobiles, and my 'petrol head' friends have sat in the car and changed their mindset about Teslas and want one too," said Nguyen.

CORRECTION

This report has been updated to reflect that the Tesla coverts electricity into power.

Follow CNBC International on Twitter and Facebook.