COE Crisis: S'pore's $10k EV Rebate Trap Revealed

This ticking clock has not gone unnoticed by motor dealers, who are now leveraging the deadline to encourage immediate purchases. The message is clear: buy now to secure the higher incentives or risk paying more later. This sales push is compounded by the typical year-end rush by dealerships to meet annual targets, creating an environment ripe for heated COE bidding in the remaining months of 2025. The situation is further intensified by a larger-than-usual pool of car owners whose vehicles are approaching the end of their 10-year COE lifespan, forcing them into the market for a replacement.

Chinese automaker BYD has dramatically reshaped the automotive landscape, becoming the top-selling car brand in Singapore in the first half of 2025 with 4,667 registrations, capturing a commanding 19.5% of the new car market. This performance has displaced longtime leaders like Toyota and BMW, whose market shares have slipped despite respectable sales figures. The aggressive pricing and diverse, tech-forward lineup offered by brands like BYD have resonated with Singaporean buyers, fundamentally altering the competitive dynamics and placing sustained upward pressure on the limited supply of COEs. This pre-existing tension means the market has very little capacity to absorb the new wave of demand spurred by the rebate changes without a significant spike in prices.

Conversely, some market observers hold out hope that an anticipated increase in COE supply for the November 2025 to January 2026 quota period could help cushion the demand shock. Yet, historical precedent offers a sobering perspective. When large car COE premiums soared past $150,000 in 2023, it required a direct, additional injection of COEs by the Land Transport Authority to temper prices, which still rebounded shortly after. This volatility underscores the financial risk buyers are facing. A panicked decision to save $10,000 on rebates could prove disastrous if it means overpaying by a greater amount on a record-high COE.

This financial strain is magnified by the reliance on financing. Sharply higher car prices translate directly into larger car loans, increasing household leverage and debt service burdens. For families already managing mortgages and other financial commitments, adding a larger-than-expected car loan can stretch monthly budgets to their breaking point. This elevated debt exposure makes households more vulnerable to interest rate fluctuations and unexpected economic shocks, turning a decision about transportation into a significant financial risk.

Furthermore, the problem creates a distortion in the second-hand car market, which traditionally serves as a safety valve for those priced out of buying new. As record-high COE premiums make new cars unattainable for a growing segment of the population, demand naturally shifts to the used car market. This surge in demand, however, pushes up the prices of pre-owned vehicles, diminishing the financial relief they once offered and creating a scenario where even the supposedly more affordable option becomes prohibitively expensive.

For families and individuals budgeting for a major financial commitment, this changes the total cost of ownership calculation. The reduced rebates will increase the upfront capital required for most EVs, potentially dampening the very green transition the incentives were designed to foster. It forces a more critical evaluation of an EV's financial viability against increasingly efficient hybrid and petrol models over a 10-year lifespan. This policy pivot highlights the delicate balance between promoting environmental sustainability and maintaining the accessibility of private transport in one of the world's most expensive car markets.

Potential buyers should resist the immediate pressure and instead calculate their breakeven point. The critical question is whether the guaranteed $10,000 saving from the higher rebate is worth the risk of bidding in a market projected to be artificially inflated by last-minute demand. For those with the flexibility to wait, the strategic move is not to simply delay, but to closely monitor the LTA's COE quota announcement in October. A generous supply could signal a potential softening of prices in early 2026, making a calculated delay the more financially sound option. This period of volatility ultimately serves as a stark reminder that in Singapore's tightly controlled vehicle market, personal financial strategy, not emotional reaction, is the key to navigating the road ahead.