Hong Kong Budget 2026: EV ‘Trade-In’ Scheme Ends – Tesla, BYD Price Impact & Tax Changes
Hong Kong’s government is ending its “One-for-One” vehicle replacement scheme on , effectively halting a key incentive for electric vehicle (EV) adoption. The decision, announced as part of the 2026-2027 budget, reflects a government assessment that the EV market has matured sufficiently to stand on its own without financial support.
The “One-for-One” scheme, launched in 2018 and revised in , offered eligible vehicle owners a tax reduction of up to HK$172,500 upon scrapping a vehicle at least six years old and purchasing a new electric car. The scheme aimed to accelerate the transition to electric vehicles and reduce emissions. The government argues that with increasing EV supply, falling prices, and growing market competitiveness, the incentive is no longer necessary.
The move comes as car dealerships report a surge in last-minute purchases as owners rush to take advantage of the scheme before it expires. Media reports indicate that quotas for the scheme have been trading for as much as HK$20,000, demonstrating the demand created by the incentive. New People’s Party legislator Ho Ching-kong had previously suggested a phased approach to ending the scheme, citing concerns about affordability, but these calls were not heeded.
While the incentive for private electric cars is being removed, the government will continue to fully exempt electric commercial vehicles and motorcycles from taxes until . This suggests a continued commitment to electrifying the commercial transport sector, where the economic case for EVs may be less clear-cut than for private vehicles.
The decision to end the “One-for-One” scheme is part of a broader budget focused on strengthening Hong Kong’s economic momentum. Financial Secretary Chan Mo-po unveiled a budget cover featuring the color purple, symbolizing this strengthening. The budget also includes funding for green technology development and charging infrastructure, indicating a continued, albeit altered, focus on sustainability.
The impact of ending the scheme on EV sales remains to be seen. Analysts will be closely watching sales figures in the coming months to determine whether the market can maintain its growth trajectory without the tax incentive. The timing of the decision, coinciding with increased EV supply and falling prices globally, may mitigate the impact. However, the removal of a significant financial benefit could dampen demand, particularly among price-sensitive consumers.
The move is also expected to benefit mainland Chinese EV manufacturers. Reports suggest that mainland EVs are becoming increasingly popular in Hong Kong, and the end of the “One-for-One” scheme may further accelerate this trend. Without the incentive, consumers may be more inclined to opt for lower-priced mainland models.
The budget also includes provisions for infrastructure development, including HK$300 million to install 3,000 fast-charging stations and HK$605 million to subsidize the purchase of electric buses and taxis. These investments demonstrate a commitment to supporting the EV ecosystem, even as direct purchase incentives are scaled back.
the government plans to establish a digital asset platform for bonds and other assets, and will inject HK$200 million into the ‘Easy BUD’ fund for small and medium-sized enterprises (SMEs). These initiatives aim to foster innovation and support economic growth across various sectors.
The end of the tax breaks for electric private cars signals a shift in government policy towards a more market-driven approach to EV adoption. While the incentive played a role in accelerating the initial uptake of EVs, the government now believes that the market is mature enough to sustain growth without direct financial support. The coming months will be crucial in determining whether this assessment proves accurate.