SINGAPORE — Household appliance manufacturer Dyson’s decision to scrap its electric car project here due to a lack of commercial feasibility is a setback to Singapore’s vision to adopt a cleaner motoring system, experts told TODAY.

They noted that turning a profit in the electric vehicle (EV) industry is tough even for big players such as Tesla, and suggest that Dyson faced a significant hurdle of needing a network of charging stations in Singapore.

Dyson’s move, announced on Thursday (Oct 10), came barely a year after the British technology company announced that it would launch its ambitious automotive project — which dovetailed with Singapore’s push to create a greener, more sustainable city.

In May, the Land Transport Authority announced its master plan for the next 20 years, which includes moving to cleaner transport including EVs — noting that buses and taxis were on track to having greener fleets by 2040.

Industry observer Oo Gin Lee said the Dyson project could have been a “catalyst for Singapore to build its capability as a hub for high-tech cars”.

“But as Dyson is pulling out early, I think the impact on Singapore is minimal,” he added.

Mr Oo said that it would not have been easy for Dyson to shift from making vacuum cleaners and hair dryers to making cars, electric or otherwise, “as they have no prior experience”.

He added that even if the company could have built a working prototype, there was still the challenge of making it at a competitive price.

Agreeing, transport specialist from Singapore Management University Terence Fan said rolling out the necessary infrastructure in Singapore could also have been a factor.

“Not many Singaporeans live in houses that come with a garage so that means Dyson would have to figure out a way to install charging spots in public car parks, and that would take a lot of resources,” said Dr Fan.

Adding that the automotive project was a “mammoth undertaking”, he said existing electric car-sharing service BlueSG is a good example of how EVs can work in Singapore.

“BlueSG is renting their cars, not selling them, so their business model is potentially profitable,” said Dr Fan, adding that Singaporeans may be reluctant to buy EVs given the inconvenience of charging them.

EVEN TESLA STRUGGLES TO MAKE MONEY

Mr Alex Capri, visiting senior fellow at the National University of Singapore (NUS) Business School, said that huge economies of scale are needed for firms to be profitable in today’s EV market. This refers to the idea that a company needs to build very large operations to achieve the cost savings needed to make a project viable.

He noted that as the supply of EVs continues to grow, even motoring giants like Tesla and the Renault-Nissan alliance that have “sold far more EVs than Dyson would have the capacity to produce” are still struggling to make money.

NUS Business School's Professor Nitin Pangarkar noted that the car industry in general is becoming less attractive with urbanisation and changes in consumer behaviour, such as concerns about climate change and a greater openness to renting cars and sharing rides.

“Dyson’s project faced stiff odds for success, even if we leave the industry challenges aside. Dyson’s resources (financial and managerial) are probably better spent elsewhere, in products similar to its current businesses,” he said.

On a more positive note, Mr Capri said that Dyson “will spin off technologies from its EV batteries and other tech, and manufacture other niche technologies”.

It could also continue to thrive in Singapore, where it has been operating for more than a decade, with 1,100 employees in roles such as supply chain management, advanced manufacturing, and research and development.

“As more value migrates to the design and AI-enabled part of the global value chain, Singapore’s highly connected infrastructure, participation in high-quality free trade agreements and strong adherence to governance frameworks will serve Dyson well,” Mr Capri said.

In a statement to TODAY, Mr Tan Kong Hwee, assistant managing director of the Economic Development Board (EDB), said that the disruption to Dyson’s operations and workforce in Singapore will be minimal as the decision to pull out of the project was taken at an early stage.

Asked if EDB had any contractual agreement with Dyson which might affect incentives to Dyson such as tax breaks and grants, he said the incentives are “tied to the company concerned realising its commitment to undertake the specified economic activity in Singapore”.

“Hence, a company will not benefit from the incentive if the project does not take place,” Mr Tan added.

“Singapore remains interested in advanced manufacturing activities, including for EVs. We believe Singapore is well positioned for activities that leverage the deep skills of our workforce, the use of advanced technologies such as robotics and automation, and ecosystem of suppliers locally and in the region,” he said.