The Ministry of Economic Affairs sent an encouraging message by retaining its NT$7,000 subsidy for purchases of new electric scooters this year, demonstrating its support for green urban mobility and Taiwan’s commitment to reducing carbon emissions.
The ministry also increased the subsidy for the purchase of new electric two-wheelers equipped with locally made engines to NT$3,000 from NT$2,000 last year. It had originally planned to gradually lower its incentives on electric scooter purchases, with an aim to allow market mechanisms to lead the industry’s development. The ministry slashed subsidies by 30 percent last year from NT$10,000 in 2019.
The move to retain the subsidy came just in time to save the nation’s wobbling electric scooter industry, which suffered a severe blow from major changes made by the Environmental Protection Administration (EPA). The ministry still considers the electric scooter industry a rising star, although start-up Gogoro, whose scooters are also deployed in Paris and Madrid, is no longer regarded as a potential unicorn by local equity investors.
The EPA last year scrapped its NT$3,000 subsidy for buying new electric scooters. On top of that, it expanded its NT$5,000 subsidy for consumers who replace their old scooters with an electric one to also include gasoline-powered scooters that meet the government’s Phase 7 emission standards, stripping electric scooter makers of their advantageous position to sell their products. It extended the policy to this year, but slashed the subsidy by 40 percent to NT$3,000.
Environmental campaigners interpreted the EPA’s decision as the government backpedaling on its commitment to push for clean energy and cut carbon emissions by phasing out two-stroke scooters, which are seen as a major source of air pollution in Taiwan. The administration defended the policy, saying that both types of scooters were helpful in improving air quality, given that they emit less carbon than two-stroke scooters.
The EPA’s policy has substantially narrowed the subsidy gap between electric and gasoline-powered scooters, causing a drastic decline in electric scooter sales last year, as most buyers are low-income earners and prone to price adjustments. A mere 90,000 electric two-wheelers were sold last year, dipping 41 percent annually and accounting for less than 1 percent of overall new scooter sales of 1.04 million units. In 2019, sales of new electric scooters occupied a more than 18 percent market share.
Gogoro bore the brunt of the policy shift, with new vehicle sales almost halving to 78,429 last year, compared with 145,678 sold in the previous year. Kwang Yang Motor, which sells its products under the KYMCO brand, was the biggest winner, selling more than 350,000 vehicles last year, thanks to strong demand for Phase 7 gasoline-powered scooters. Kwang Yang last year held a 70 percent market share, securing its top position in the nation’s scooter market for the 21st consecutive year.
To breathe new life into the electric vehicle industry, the ministry last month decided to halt its subsidy cuts, as last year’s sluggish sales indicated it was premature to scale back incentives and the industry is still heavily dependent on government subsidies to grow. The ministry has made the right decision by giving the industry a second chance to grow into a vital export industry.
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