LTA to Review COE System as EV Boom Blurs the Line Between Categories

The Land Transport Authority (LTA) has announced it will conduct a comprehensive review of the Certificate of Entitlement (COE) system's car categorisation framework. Acting Transport Minister Jeffrey Siow made the announcement in Parliament on 4 March 2026, following months of market turbulence that has seen the traditional pricing hierarchy between Category A and Category B turned on its head.

Why it matters to you: The COE category your car falls into directly determines how much you pay. If you're shopping for an EV — particularly a more powerful one — the outcome of this review could significantly change your cost calculations.

What Triggered the Review

The COE system has been showing unusual behaviour. In the 20 February 2026 bidding exercise, the Category A premium overtook Category B for the first time in nearly six years. Category A is traditionally for smaller, mass-market cars, while Category B covers larger, more powerful vehicles and is typically more expensive.

The anomaly is being driven by a growing trend: manufacturers are engineering high-end EVs and ICE cars with specifications that are deliberately calibrated to qualify for the cheaper Category A. The current Category A criteria allow:

• Petrol/hybrid cars: up to 1,600cc engine capacity and up to 130bhp
• Electric vehicles: maximum power output of 110kW

As more premium EVs are tuned to stay within the 110kW threshold, they compete directly with genuinely mass-market cars for Category A COEs, driving up prices in that category.

What the Review Will Cover

The LTA will consult widely with motorists, car dealers, manufacturers, and academics. The review is expected to be completed by the end of 2026. No immediate changes will be made to the current system while the review is underway.

Acting Minister Siow acknowledged that there is "probably still some merit to having some distinction" between mass-market and higher-end vehicle categories — suggesting the two-tier system is unlikely to be abolished entirely, but the specific criteria for each tier may be redefined.

Our Take

This review has significant implications for the EV market. If the LTA raises the power threshold for Category A EVs, it could make more models eligible for the cheaper COE, potentially reducing the total cost of ownership. Conversely, if the threshold is lowered or a new EV-specific category is created, some models currently qualifying for Category A could be pushed into the more expensive Category B.

For now, the market remains in a state of uncertainty. Buyers considering a more powerful EV — particularly models like the BYD Seal, Tesla Model 3, or Hyundai Ioniq 6 — may want to keep a close eye on how this review unfolds before making a purchase decision.

Source: Parliament, Acting Minister for Transport Jeffrey Siow, 4 March 2026