Singapore gets a boost in electric car making drive
Home appliances brand Dyson picks island city as its location for new venture
When James Dyson, the billionaire British inventor of the bagless vacuum cleaner, unveiled a plan to build an electric car plant in Singapore, it raised a few eyebrows.
Not only does the landstarved city state have some of the highest average salaries in the world, but it has been nearly 40 years since Ford closed its factory in Singapore, effectively ending car production on the island. “It is a bit of a surprise because of the cost base and no other car manufacturing plant being here,” said Shantanu Majumdar, regional director at consultancy JD Power.
Dyson said the decision was based on supply chains, access to markets and the availability ■ of expertise, which offset the cost factor. But what other factors could have influenced the decision?
Here’s a look at some of the less obvious pros and cons:
■ 1. High costs vs generous incentives: Aside from its skilled engineers and scientists, for a high-tech firm like Dyson, Singapore offers generous incentive schemes. Some schemes include tax breaks for five years, which can be extended, and grants that can cover up to 30 per cent of the cost of projects to improve business efficiency.
To shore up productivity in its manufacturing sector, which makes up less than a quarter of its output, Singapore has focused efforts on attracting high-end manufacturers and those who adopt automated production processes.
■ 2. Small market vs China gateway: Singapore is one of the world’s most expensive places to own a car because the government strictly controls the vehicle population.
In the broader Southeast Asia, only 142 electric vehicles are forecast to be sold this year, data from consultant LMC Automotive show. By contrast, sales in China are forecast to almost reach 700,000 vehicles this year.
But with one of the world’s busiest ports on its doorstep, Dyson can roll a car off the production line in Singapore and within the hour it can be on its way to China or other sizeable electric vehicle markets South Korea or Japan.
Asia accounted for more than 70 per cent of its growth last year, Dyson said.
■ 3. Familiarity vs New Frontier: Dyson already employs 1,100 people in Singapore, making 21 million digital electric motors a year.
“Since Singapore is at the heart of Southeast Asia, Dyson would be best placed to source many components from neighbouring countries and, locally, assemble and manufacture the high-tech car here,” said a corporate banker.
But China is becoming a crowded market for making electric vehicles and the government is reining in subsidies.
JD Power’s Majumdar said intellectual property would be another consideration for Dyson. “Intellectual protections are very strong in Singapore. It is definitely an advantage. When you are in China ... you may not be so comfortable on that part.” like