[One-for-one replacement guide] Should you stick with petrol cars or switch to an EV? A comprehensive guide for car owners!

2024-08-16

6 Mins Read

Which is better: Petrol cars or EVs | Details of the One-for-One Replacement scheme
Considerations when switching to an EV | How can AXA iMotor Insurance protect you

In recent years, electric vehicles (EVs) have become increasingly popular due to government policies, technological advancements, and environmental considerations. With growing awareness of environmental issues and economic factors, more car owners are contemplating whether to switch from traditional petrol vehicles to EVs. However, some drivers are hesitant due to concerns about cost, infrastructure, and range. This decision isn’t just about being eco-friendly; it's also an investment in the future of transportation.

In 2018, the Hong Kong government launched the One-for-One Replacement scheme, offering first registration tax concessions to encourage private car owners to replace their old petrol vehicles with EVs. According to the latest information from the Transport Department, this scheme will be extended for two more years, until 31 March 2026. This guide will explore the factors car owners should consider when deciding whether to switch to an electric private car and provide up-to-date information on the One-for-One Replacement scheme to help you make the best choice for yourself.

Which is better: Petrol cars or EVs?

The choice between an EV and a petrol car depends on various factors, including personal needs, preferences, cost, and convenience. Below is a detailed comparison on the advantages and disadvantages of petrol cars and EVs:

Petrol Cars: Pros and cons

1. Operating costs and infrastructure convenience

Pros: Petrol stations are widespread, with around 180 stations across Hong Kong. Refuelling is quick, taking only about 5 minutes, while charging an EV can take over an hour.

Cons: Numerous statistics show that petrol prices in Hong Kong are among the highest in the world.

2. Range and environmental considerations

Pros: Petrol cars generally have a longer range than EVs. According to data from the U.S. Department of Energy, EVs have about 60% of the range of petrol cars. Therefore, petrol cars are more suitable for long-distance or unpredictable driving conditions.

Cons: Petrol cars emit exhaust fumes, contributing to air and noise pollution, especially during long drives.

3. Vehicle selection and variety

Pros: The market offers a wide variety of petrol car models from different brands, catering to various user needs and preferences.

Cons: As environmental regulations tighten, some markets are setting timelines to ban the sale of petrol cars or imposing restrictions. Additionally, as EVs continue to mature, the range of models available to meet different user needs and preferences will only increase, posing a significant threat to the status of petrol cars.

AXA iMotor Insurance
Enjoy driving with the best customised car Insurance!

EVs: Pros and cons

1. Technical support and convenience

Pros: While many believe that Hong Kong's public charging network is insufficient for EVs, most people drive 40-90 km per day, meaning they can charge overnight in residential parking spaces. The demand for a large-scale public charging infrastructure may not be as necessary. Furthermore, with strong support from governments and car manufacturers, the number of charging stations is expected to increase rapidly. For example, some manufacturers has been expanding its network of charging stations across Hong Kong in recent years, making EVs more popular in the region.

Cons: Since not many service centres are equipped to repair EVs, and the repair channels and resources are not as developed as for petrol cars, EVs might need to be serviced exclusively at the manufacturer's facility, reducing convenience and cannot be repaired immediately.

2. Driving performance

Pros: EVs provide a smoother and quieter ride as they lack the vibrations and noise of an internal combustion engine, with quick acceleration responses. Also, some drivers mistakenly believe that the lack of engine noise in EVs indicates lower speed or performance. In fact, EVs often accelerate faster than some petrol cars and can easily meet daily driving needs. Data shows that many newly released EVs now have a range comparable to that of petrol cars, which alleviated concerns.

Cons: Some drivers might prefer the sound and traditional driving experience of a petrol engine.

3. Operating costs

Pros: Since electricity costs less than petrol, EVs usually have lower energy costs. Additionally, EVs have fewer moving parts and don't require as much maintenance, such as repairing, oil changes or brake pad replacements, which reduces long-term maintenance costs. In the long run, an EV might be more economical for buyers.

Cons: The initial purchase price of an EV is higher. According to Consumer Reports, most new EVs are luxury models with an average price exceeding USD 61,000, which is USD 12,000 higher than the industry average. Moreover, battery performance degrading over time. Generally, the life of a battery lasts only 8 to 12 years. The electronic system, electric motor, and batteries in EVs are expensive. According to some manufacturers stating that the battery alone accounts for about one-third of the total vehicle price, so daily maintenance costs have become another crucial cost.

4. Policy support and subsidies

Pros: Government incentives, such as purchase subsidies, tax concessions, and support for charging infrastructure, reduce the actual cost of an EV.

Cons: These policies may change over time, so it's essential to consider their stability and long-term impact.

5. Environmental friendliness

Pros: EVs produce zero exhaust emissions during operation, helping reduce air pollution and greenhouse gas emissions, with a smaller environmental impact.

Cons: Manufacturing batteries can involve high energy consumption and a certain carbon footprint. Moreover, the heavier batteries in EVs increase pressure on brakes and tyres, accelerating wear and releasing more particulate pollutants. However, research shows that the overall lifecycle pollution from EVs is still significantly lower than that of petrol cars.

AXA iMotor Insurance
Enjoy driving with the best customised car Insurance!

Details of the One-for-One Replacement scheme for EV

What is the One-for-One Replacement scheme for EV?

The One-for-One Replacement scheme aims to encourage private car owners to scrap and deregister their old private cars (including petrol, diesel, hybrid, or purely electric vehicles) and replace them with low-emission electric private cars (powered solely by electricity and emitting no exhaust gases).

Objectives of the Scheme:

Reduce carbon emissions: Compared to traditional petrol cars, EVs significantly reduce carbon dioxide and other harmful gas emissions, improving air quality and helping to mitigate global warming.
Energy efficiency: EVs have higher energy conversion efficiency than petrol cars, effectively reducing energy consumption.

Eligibility criteria

Old private car eligibility:

Must be a private car as defined under the Hong Kong Road Traffic Ordinance (Chapter 374).
The old private car must have been first registered in Hong Kong over six years before deregistration.
The owner must have owned the old private car for more than 18 consecutive months before deregistration.
The vehicle must have had a valid licence for at least 10 months in the 12 months preceding deregistration.

Replacement EV eligibility:

Must be a purely electric private car that emits no exhaust gases.
The first registered owner of the replacement EV must be the registered owner of the old private car at the time of deregistration.

First registration tax concession

Private car owners who qualify for the One-for-One Replacement scheme can receive a higher first registration tax concession, up to HKD 172,500. The specific concession amount depends on the taxable value of the old private car and the date of application.

Scheme duration

The scheme runs from 28 February 2018 to 31 March 2026.

Application procedure

1. Confirm eligibility: Check the registration documents of the old private car to ensure it meets the application criteria.

2. Arrange to scrap the old private car: Use a commercial vehicle scrapping service and obtain a scrapping certificate.

3. Deregister the old vehicle: Submit the completed and signed Vehicle Registration Cancellation Notice to the Transport Department.

4. Apply for a replacement EV: Submit the first registration application form and the One-for-One Replacement scheme application form, including the required documents, to receive the higher first registration tax concession.

5. Calculate the first registration tax: The tax amount is calculated based on the taxable value and the application date.

6. Processing time: Applications typically take around 10 working days to process, starting from the receipt of complete application forms and documents.

Additional information

Financial planning: Considerations include budgeting for the vehicle purchase, loans, and insurance.
Disabled drivers: Eligible disabled drivers may receive a partial first registration tax exemption.

For the latest details on the scheme, please refer to the official website of the Hong Kong Transport Department.

AXA iMotor Insurance
Enjoy driving with the best customised car Insurance!

Considerations when switching to an EV

1. Driving performance

Range: Different models offer varying battery capacities and range. It's important to choose one that meets your actual driving needs.
Charging speed: Evaluate the support for fast charging technology and the availability of charging facilities.
Safety and driver assistance systems: Look for features like automatic braking, lane-keeping assistance, and blind-spot monitoring.

2. Charging facilities

Home charging

Determine whether your residence has a dedicated parking space with an accessible power outlet for installing a charging station.
Select a charging station that suits your vehicle and needs, whether it's a slow or fast charger.

Public charging station layout

Ensure there are sufficient public charging facilities near the places you frequently park.
Different charging facilities may offer varying speeds and service quality. Use relevant apps to check reviews and ratings.

3. Battery life and warranty

Battery technology and lifespan

Battery technology: Advances in battery technology significantly impact an EV's range and lifespan. Lithium-ion batteries are currently the most common, but lifespan and performance can vary between models.

Carefully review the warranty policies

Battery life guarantee: Most manufacturers offer a specific warranty period or mileage guarantee for battery life.
Battery performance degradation: Check whether the warranty covers battery performance degradation over time.

4. EV Insurance

In Hong Kong, the insurance coverage for EVs is generally similar to that for traditional petrol vehicles, but there are some specific considerations and important points to note:

Basic private car insurance

Third-party liability insurance: This is the minimum legal requirement, covering compensation for third-party injuries or property damage caused by an accident. For example, AXA iMotor Insurance provides protection against third party legal liability for death or bodily injury to other people up to HKD 100,000,000 and damage to other people's property up to HKD 2,000,000
Comprehensive insurance: Comprehensive insurance typically includes third-party liability and covers damage to your vehicle caused by accidents, fire, theft, and other unforeseen events.

EV insurance

Battery insurance: One of the major costs of an EV is the battery replacement cost. Some insurance providers offer battery insurance to cover damage or performance degradation. For instance, AXA iMotor insurance cover your car, car accessories or spare parts, including the battery for electric car, from loss or damage. No depreciation on spare parts which need replacement after a car accident¹.
Charging facilities insurance: If you have installed charging facilities at home or work, insurance companies might consider insuring these facilities, especially in the event of accidents like fires.

Other specific considerations for EV insurance

Vehicle depreciation rate: Due to the fast-paced changes in EV technology and market conditions, insurers may consider the depreciation rate of the vehicle, which could affect how premiums are calculated.
Safety of charging facilities: Insurers may be concerned about the safety and legality of the charging facilities you use. Ensuring that installation and usage comply with local regulations is crucial.
Emergency support services: Given that the repair networks and resources for EVs are not as developed as those for petrol vehicles, Hong Kong EV owners should check whether their insurance provider offers emergency support services, such as towing to a designated charging station. For example, AXA iMotor insurance provides emergency towing service, including towing an electric car to designated charging station, and delivery service after your car is repaired.

Since EV repair technologies are not yet widespread, and parts and maintenance costs are generally higher than for conventional vehicles, EV insurance requires more comprehensive coverage and carries a higher premium. It is advisable for EV owners to thoroughly understand the coverage and details of their EV insurance policy and choose one that suits their needs.

AXA iMotor Insurance
Enjoy driving with the best customised car Insurance!

Plan your vehicle purchase and make the right choice

The development of EV technology is rapidly moving towards greater intelligence, with the application of autonomous driving and smart connectivity features becoming increasingly mature. These innovations not only enhance driving safety and comfort but also boost the competitiveness and appeal of EVs in the market.

Market forecasts indicate that EVs will continue to grow rapidly in the coming years, reflecting society's increasing focus on environmental protection and sustainability. In contrast, traditional petrol vehicles face stricter environmental regulations and energy dependency issues, which may limit their future development. It is hoped that this article will assist current and future car owners in making the right choice and enjoying the pleasure of driving.

How can AXA iMotor Insurance protect you?

AXA iMotor Insurance offers comprehensive coverage for both electric and gas-powered cars, providing accident and third-party liability protection, along with multiple additional benefits, for your peace of mind behind the wheel.

Protect you against third party legal liability for death or bodily injury to other people up to HKD 100,000,000 and damage to other people's property up to HKD 2,000,000.
Cover your car, car accessories or spare parts, including the battery for electric car, from loss or damage. No depreciation on spare parts which need replacement after a car accident¹.
Offer medical expenses for the insured driver(s) and any occupant(s) up to HKD 4,000 per policy year.
Provide 24-hour assistance hotline for emergency and claim advisory.
Provide emergency towing service, including towing an electric car to designated charging station, and delivery service after your car is repaired.
Cover the cost of rental car in case the car is under repair or being stolen.
Cover personal accident from death or total permanent disablement to insured driver(s) up to HKD 100,000 per policy year.
No Claims Discount (NCD) protection².
Cover damaged windscreen replacement up to HKD 5,000 without change in NCD.

For the latest updates of the One-for-One Replacement scheme, please refer to the webpages of the HKSAR Transport Department.

¹ Motor car is manufactured and registered within 1 year while rise the claim after accidence.

² Not applicable for specific type of vehicle.

Insurance plan coverage varies and is subject to the terms and conditions of the policy. For details on the coverage of the products, please refer to the relevant product brochure and policy contract.

AXA Hong Kong and its related or holding companies make no warranties or assume any responsibility for the information and materials provided, including the absence of infringement, safety, accuracy, completeness, adequacy, reasonableness, suitability for purpose, or the absence of computer viruses. AXA Hong Kong and its related companies and holding companies will not accept any legal liability for any loss, damage, cost, or other expenses arising from any errors, inaccuracies, or omissions related to the information and materials, whether wholly or partially, directly or indirectly, except to the extent that such liability cannot be excluded by law.