New EV Incentives Impact on COE

Singapore’s EV Transformation in Numbers

Singapore’s transition to electric vehicles has moved from aspiration to reality faster than most observers anticipated. The data from 2025 tells a striking story of acceleration:

• 45.6% of Category A registrations were EVs in the first nine months of 2025.
• 40.2% of all new car registrations in Q1 2025 were fully electric.
• 41,732 EVs were on Singapore’s roads as of September 2025, comprising 6.3% of the total car population.

These numbers represent a dramatic acceleration from just a few years ago when EVs were a single-digit percentage of new registrations. The shift has been driven by a combination of falling EV prices, expanding model choices, improved charging infrastructure, and government incentives designed to meet Singapore Green Plan 2030 targets.

But the EV boom has also created unintended consequences for the COE system—consequences that are now reshaping how every car buyer in Singapore, whether purchasing electric or petrol, plans their next vehicle. Understanding these dynamics is essential for anyone entering the market in 2026.

BYD Dominance and the Affordable EV Wave

The Chinese manufacturer BYD has emerged as the leading force in Singapore’s EV market. In Q1 2025 alone, BYD registered 2,183 units—a figure that placed it ahead of established European and Japanese players and cemented its position as the default choice for budget-conscious EV buyers in Singapore.

BYD’s success rests on a simple formula: deliver a competent, well-equipped electric car at a price point that, after government incentives and lower running costs, makes it genuinely competitive with a mid-range petrol sedan. Models like the Dolphin and Atto 3 offer modern features including over-the-air updates, advanced driver assistance systems, and decent range for Singapore’s compact geography. Crucially, their power outputs are engineered to qualify for Category A, the most popular and historically cheaper COE category.

BYD is far from alone. Other Chinese brands including MG (owned by SAIC), Chery, and Great Wall Motors have followed a similar playbook, entering the Singapore market with affordable electric options that simply did not exist three years ago. Korean manufacturers Hyundai and Kia have expanded their EV lineups with models priced competitively against BYD. Even premium European brands like Volkswagen and BMW now offer Cat A-eligible EVs, though at higher price points.

The net effect has been an explosion in the number of EV models available to Singapore buyers. Where once there were a handful of niche options, the market now offers several dozen electric cars across a wide price spectrum. This variety has widened the pool of potential EV buyers enormously, drawing in consumers who previously saw electric vehicles as either too expensive, too unfamiliar, or too impractical.

The Power-Tuning Phenomenon

Perhaps the most consequential development for the COE market is the widespread practice of power-tuning: manufacturers deliberately limiting the power output of their Singapore-spec EVs to stay below the 130 bhp Category A threshold.

The scale of this practice is remarkable. Of the 38 EV models currently registered under Cat A, at least 15 have a Category B version available in other markets or even listed on Singapore price sheets. The manufacturer offers two variants of the same car: one tuned to, say, 129 bhp for Cat A and another at 170 bhp or more for Cat B. Singapore buyers overwhelmingly choose the Cat A version to save on the COE premium, which can differ by $5,000-$10,000 or more between the two categories.

How Power-Tuning Works

For electric vehicles, reducing power output is technically straightforward. Unlike an internal combustion engine where physical components determine maximum power, an EV’s power is governed by software parameters that control the motor’s output. Manufacturers can set a lower maximum power limit in the vehicle’s firmware without changing any hardware. The motor, battery, and drivetrain are identical to the higher-powered variant; only the software calibration differs.

This means a Cat A-tuned EV has the same weight, the same battery capacity, and often the same energy consumption as its Cat B sibling—the only difference is a software limit on peak power. Some owners have speculated about whether this limit could be removed after purchase, but doing so would violate the vehicle’s type approval and COE registration conditions.

Why This Matters for COE Prices

Power-tuning creates a systematic transfer of demand from Cat B to Cat A. Buyers who, under normal circumstances, would be purchasing a car in the higher category are instead bidding in the lower one. The monthly Cat A quota of just 1,264 certificates has not been adjusted to reflect this influx, resulting in more bidders chasing the same number of certificates.

This is the primary mechanism behind the convergence of Cat A and Cat B premiums. In February 2026, Cat A premiums actually exceeded Cat B for the first time in the system’s modern history: $106,501 versus $105,001. While the traditional order reasserted itself in March (Cat A at $108,220-$111,890 versus Cat B at $114,002-$115,568 across the two exercises), the gap remains historically narrow compared to the $20,000-$50,000 spreads that were routine just two years ago.

You can visualise this convergence trend on our historical Trends page, where the Cat A and Cat B lines have been steadily converging since mid-2024.

The Government Takes Notice

The category convergence and the distortions caused by power-tuning have not gone unnoticed by policymakers. On 4 March 2026, Acting Transport Minister Jeffrey Siow announced that the Land Transport Authority will undertake a formal review of COE categorisation. The review is widely expected to address the structural imbalance created by EVs flooding into Cat A.

Industry speculation about possible outcomes includes several approaches, each with different implications:

• Raising the Cat A power threshold: Increasing it from 130 bhp to, say, 150 or 160 bhp would allow more EVs to qualify for Cat A naturally without power-tuning. This would reduce the incentive for manufacturers to create artificially limited variants, but it could also expand the Cat A buyer pool further unless the quota is adjusted simultaneously.
• Creating a dedicated EV category: Separating electric and combustion vehicles into distinct categories would prevent EVs from crowding out ICE buyers in Cat A. This is the most radical proposal and would require building an entirely new quota allocation and bidding infrastructure.
• Adopting a composite metric: Using a combination of power output, kerb weight, and energy consumption rather than a single power figure would create a more nuanced classification that is harder for manufacturers to game. However, it would also be more complex for consumers to understand.
• Weight-based categorisation: Some observers have suggested using vehicle kerb weight as the primary classification criterion, arguing that weight better captures a vehicle’s road space and infrastructure impact than power output. This would disadvantage heavier EVs (batteries are heavy) but would be technology-neutral.

No timeline has been announced for the review’s completion. Given the need for public consultation, industry feedback, system updates, and a transition period, changes are unlikely before late 2026 at the earliest and possibly not until 2027.

Impact on Specific COE Categories

Category A: Under Unprecedented Pressure

Cat A is bearing the brunt of the EV demand surge. With nearly half of all registrations now electric, and with manufacturers actively funnelling buyers into this category through power-tuning, supply is severely outstripped. Monthly allocations of 1,264 certificates serve a market that has effectively doubled its buyer pool in two years, as EV buyers join existing ICE demand without a corresponding increase in supply.

The result is Cat A premiums above $110K—a level that was virtually unthinkable for the category designed to cover small, affordable cars. A decade ago, Cat A premiums were in the $50K-$70K range; today they rival or exceed what Cat B cost just two years prior.

Category B: A Paradoxical Calm

Cat B has been paradoxically quieter as demand migrates to Cat A via power-tuning. Fewer buyers are competing for Cat B certificates because many who would have been Cat B customers are now purchasing power-tuned Cat A EVs. Premiums remain high in absolute terms ($114,002 to $115,568 in March 2026), but the category has not experienced the same rate of increase as Cat A.

If the category review results in changes that push some EV demand back into Cat B—for instance, by raising the Cat A power threshold and encouraging manufacturers to sell their cars at full power—Cat B premiums could face renewed upward pressure while Cat A softens. This redistribution effect is one of the most important unknowns in the current market.

Category E: The Uncertainty Hedge

Category E (Open) certificates can be used for any vehicle type, making them a popular hedge for buyers who want flexibility or are uncertain about their car’s final category classification. Cat E premiums have tracked above Cat B, closing at $114,890 to $118,119 in March 2026. Buyers who are uncertain whether their chosen car will end up in Cat A or Cat B—or who are waiting to see how the category review plays out—sometimes opt for Cat E to eliminate classification risk.

What This Means for Car Buyers in 2026

If you are considering a car purchase in Singapore today, the EV revolution has practical implications regardless of whether you are buying electric or petrol:

• For EV buyers: Cat A is expensive but competitive on total cost of ownership. Even with a $110K+ COE, an EV’s lower running costs—cheaper electricity versus petrol, reduced road tax, minimal servicing (no oil changes, less brake wear due to regenerative braking)—can make the 10-year total cost comparable to a petrol car at a similar price point. Model it with our Total Cost Calculator.
• For petrol buyers in Cat A: You are now competing with a vastly larger pool of bidders than in previous years. If your target car is a traditional petrol hatchback or sedan, you are paying a premium that has been inflated by EV demand. Consider whether the maths still work at current COE levels or whether a used car might be a better value proposition.
• For Cat B buyers: The relative calm in Cat B creates an unusual opportunity. The gap between Cat A and Cat B is historically narrow, meaning you get a significantly more powerful and often larger vehicle for only a marginal increase in COE cost. This dynamic may not last if the category review pushes demand back into Cat B.
• Check the power rating carefully: If you are considering a power-tuned Cat A EV, understand what you are giving up. The performance difference between 129 bhp and 170 bhp is noticeable in daily driving, particularly at highway speeds and during overtaking. You may be paying nearly the same COE as someone in Cat B but getting a deliberately limited vehicle.
• Watch for category changes: If LTA restructures the categories, the competitive landscape could shift quickly. A car that qualifies for Cat A today might face a different pricing environment tomorrow. This is not necessarily a reason to delay your purchase, but it is worth factoring into your decision timeline.

The Road Ahead for Singapore’s EV Market and COE System

Singapore has set ambitious targets under the Green Plan 2030, aiming for all new car and taxi registrations to be cleaner-energy models by 2030. The current trajectory—40% EV share and rising—suggests the target is achievable well ahead of schedule. The government has invested heavily in charging infrastructure, with thousands of public charging points now available island-wide and plans to expand further.

But the challenge is not simply about vehicle technology or charging access; it is about market design. The COE framework was built in 1990 for an era of combustion engines, where power output and engine capacity served as reasonable proxies for vehicle size, cost, and the wealth of the buyer. In an electric world, those proxies break down. A $40,000 BYD Dolphin and a $200,000 Porsche Taycan are both EVs, but they serve fundamentally different market segments and impose different demands on road infrastructure.

The LTA category review is the most significant potential reform of the COE system in years. How the government resolves the tension between encouraging EV adoption and maintaining a fair, functional certificate allocation system will shape the Singapore car market for the next decade. We will continue tracking every data point on our Trends page and will publish detailed coverage as the review progresses.

For a foundational understanding of how the COE system works, start with our What Is COE? guide. To see how quota allocations interact with EV demand, visit our Quota Watch dashboard. And if you want to test your prediction of where premiums will go next, try our Prediction Game.