By Christopher Tan, Senior Correspondent

There is an upside to high COE prices: Electric cars heading here later this year will become a lot more attractive.

This is because these cars, to be part of a test-bedding project here, are tax-exempt. So, the pricier the COE, the bigger the 'saving' for the owner of an electric car, which does not need a COE.

Take the Mitsubishi i-MiEV, for example. The car, after tax exemption, is expected to cost around $85,000.

At today's COE prices, the petrol-powered version Mitsubishi i costs around $76,000. That means the battery-powered version is merely 12 per cent pricier.

About a year ago, the conventional i was around $55,000 on the back of bargain basement COEs. Under those conditions, the electric version would have been 55 per cent pricier.

It is all relative, of course. But since nothing exists in a void, relativity is everything.

The same argument will hold true for the Renault Fluence ZE, a stylish lithium-driven sedan. Renault is reportedly pricing the Fluence ZE at the same level as the petrol-powered Fluence (which replaces the Renault Megane sedan).

If this is true, the ZE will be substantially cheaper because it does not require a COE. The higher the premium, the 'cheaper' the ZE will appear.

Mr Andre Roy, group managing director of Wearnes' automotive division, which represents the Renault brand among others, says electric cars will naturally be more viable 'if COEs are $50,000 than if they were $20,000'.

And the same economics of relative value will apply to rental firms that offer electric cars. One such firm is Smart Car Rental, which intends to have, for a start, three electric Mitsubishi i-MiEVs.

Managing director Johnny Harjantho says he intends to charge a rental of $150 a day for the electric hatchback. This is about twice the rate for an equivalent petrol model bought more than a year ago.

If, however, Smart Car Rental has to go out and buy new petrol-powered Mitsubishi i's today, it may well have to charge more for their rental. If so, the i-MiEV rental will not be twice as expensive, but possibly only 30 per cent higher.

The electric cars will arrive in Singapore for test-bedding from fourth quarter this year. Besides Mitsubishis and Renaults, there will be Nissans as well. These tax-free cars are to be registered with institutions and corporations. Individuals who want to drive these cars will have to lease them.

How much will COEs cost later this year? Or for that matter, third quarter next year, when the Fluence ZE is due? Current indications are that premiums will be on the uptrend. And if supply is crimped again in August, chances are that electric cars will appear downright cheap when they start plying silently here.

christan@sph.com.sg

This article was first published in The Straits Times.

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