Why did Dyson pick Singapore to build its electric car?
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[October 24, 2018]
By John Geddie and Aradhana Aravindan
SINGAPORE (Reuters) - 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 land-starved city state have some of the highest
average salaries in the world, but it has been nearly 40 years since
Ford <F.N> closed its factory in Singapore, effectively ending car
production on the Southeast Asian island.
"It is a bit of a surprise because of the cost base and no other car
manufacturing plant being here," said Shantanu Majumdar, a regional
director at consultancy JD Power.
Dyson said on Tuesday 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? Why not head
straight to the biggest electric vehicle market in the world, China,
like rival Tesla <TSLA.O>?
![](http://archives.lincolndailynews.com/2018/Oct/24/images/ads/current/bees_lda_PPP_2018.png)
Here's a look at some of the less obvious pros and cons:
1. High Costs vs Generous Incentives
Compared with other global cities, Singapore has some of the highest
average salaries in the world after tax, according to studies by
Deutsche Bank. Land available for industrial use is scarce and
expensive, and it ranks highly in general cost-of-living indexes.
But 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 percent of the cost of projects to
improve business efficiency. Singapore declined to comment on whether
Dyson benefited from any such schemes.
To shore up productivity in its manufacturing sector, which makes up
less than 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
Dyson may have decided to make electric cars in Singapore, but few are
likely to be driven here or anywhere in Southeast Asia for that matter.
The number of privately owned electric vehicles in Singapore is in
single digits, and Tesla CEO Elon Musk has criticized Singapore for not
being supportive of electric vehicles.
Singapore is one of the world's most expensive places to own a car
because the government strictly controls the vehicle population by
charging owners a variable rate for the right to own and use a vehicle
for a limited number of years.
In the broader Southeast Asia, only 142 electric vehicles are forecast
to be sold this year, data from consultant LMC Automotive shows.
By contrast, sales in China are forecast to almost reach 700,000
vehicles this year, more than double the combined sales from the United
States and Europe.
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![](../images/102418PIX/busine27.jpg)
A Dyson logo is seen on
one of company's products presented during an event in Beijing,
China September 12, 2018. REUTERS/Damir Sagolj/File Photo
![](http://archives.lincolndailynews.com/2018/Oct/24/images/ads/current/collision_lda_PPP_2018.png)
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 sizable electric vehicle markets like South Korea or Japan.
Dyson products - which also include bladeless fans, air purifiers and hair
dryers - are becoming a premium brand in China and other Asian markets. Asia
accounted for more than 70 percent of its growth last year, the firm said.
3. Familiarity vs New Frontier
Dyson's history with Singapore probably also played a role.
It already employs 1,100 people in Singapore, making 21 million digital electric
motors a year. It also has manufacturing hubs in Malaysia - connected to
Singapore via two road bridges - and the Philippines.
"This is obviously a surprise but since Singapore is at the heart of Southeast
Asia, Dyson would be best placed to source many components from neighboring
countries and, locally, assemble and manufacture the high-tech car here," said a
corporate banker who deals with multinational firms in the region.
Another option for Dyson could have been to follow rival Tesla to the biggest
market, China.
By the time Dyson's first car is ready in 2021, Tesla may already be selling
locally produced cars in China after it signed a deal with the Shanghai
government for an 860,000 square meter plot of land to build its first overseas
Gigafactory.
But China is becoming a crowded market for making electric vehicles and the
government is reining in subsidies.
Meanwhile, Singapore does have an extensive free trade agreement with China
which lists various car types and car parts in its tariff-reduction schedule.
Singapore's Economic Development Board did not immediately respond to a request
for comment on whether electric vehicles would be eligible for exemptions under
this arrangement.
JD Power's Majumdar said intellectual property would be another consideration
for Dyson.
![](http://archives.lincolndailynews.com/2018/Oct/24/images/ads/current/advcarpet_quarter_FHI_2017.png)
"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."
(Reporting by John Geddie and Aradhana Aravindan; Additional reporting by Jack
Kim, Anshuman Daga and Yilei Sun; Editing by Neil Fullick)
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