Electric vehicle adoption: Demand for green car loans up as some banks lure customers with perks
OCBC said its Eco-Care car loans accounted for nearly one in 10 car loans last year.
Among those who have taken a green loan to buy an EV is Mr Thomas Kok.
SINGAPORE: Potential car buyers looking to make a green choice may find just the right incentive to do so.
Banks here are riding the green wave, as demand for electric vehicles (EV) heats up. Some are offering loans with lower interest rates and perks for EV buyers.
Among them is Oversea-Chinese Banking Corporation (OCBC), which offers an eco-friendly car loan at about 2.4 per cent interest rate, lower than the 2.7 per cent for mainstream cars.
The bank also offers free charging credits and free home charging stations for landed property residents who buy certain EVs.OCBC said these Eco-Care car loans accounted for nearly one in 10 car loans last year.
This is four times the number of such loans provided in 2021, said its head of renovation, car, and wealth financing Kenny Tan.
“We believe this is in line with rising awareness of environmental sustainability among Singaporeans, due to the government's push for electrification of our land transport,” he said.
Maybank said about 20 per cent of vehicles they have financed to date are electric and hybrid vehicles, with the loans amounting to more than S$600 million, while UOB said that one in 10 car loan applications are for EVs.
The government has been pushing EV adoption for the past two years, in a bid to reduce peak land transport emissions by 80 per cent by or around 2050.
WHO IS TAKING THESE LOANS?
UOB said that based on its data, nearly half of its clients who take up its green loans are millennials.
"They are high-wage earners, and almost 50 per cent of them are staying in apartments,” he said.
Among those who have taken a green loan to buy an EV is Thomas Kok.Â
Mr Kok, who got a loan from OCBC, said that the preferential interest rates were an incentive for him.
“Sustainability has been in my life for quite some time,” he added.
But not everyone is sold on the idea of a switch just yet, mainly due to insufficient charging infrastructure, long wait times, and the higher cost of greener cars relative to conventional ones.
BETTER ADOPTION TO COME
While the popularity of EVs has grown with rebates provided by the government and increasing EV options, Associate Professor of Economics Walter Theseira from the Singapore University of Social Sciences said people may be waiting for their favourite brand to release an EV.
He noted that mainstream Japanese car makers are lagging when it comes to EVs.
He added that another barrier could be the lack of familiarity Singaporean motorists have with EVs - they may not know that EVs drive better than conventional cars, and that charging technology has improved.
However, things may look different by the end of this decade, said Assoc Prof Theseira.
There is “massive” investment in EV manufacturing and battery manufacturing and technology globally, he said.
“It's widely expected that even without incentives, new EVs will be cost-comparable within a couple of years to at least many conventional car models just because the battery and the manufacturing costs keep falling,” he said.
“By the end of this decade, we're likely to see that all the best and latest cars by any manufacturer will be an electric vehicle. And they'll be cost competitive if not cheaper than conventional cars, which will be legacy vehicles at that point,” he added.
