Why Electric Cars Cannot Pay

In the Sunday Times of  1st August, Jeremy Clarkson does a review of BMW Mini E – an electric test car. (In Gear Pages 15 & 16).

He concludes that  electric cars are something that cannot be achieved – simply because they are too expensive, too short a range, and we have not got the electrical capacity.

There is another reason. We would decimate out public finances. Clarkson estimates that topping the Mini E up with standard rate electricity would cost £4, compared with about £12 for a standard Mini Cooper, or around £10 for a 60mpg diesel for 104 miles.

Now consider the exchequer impact. The £4 of electricity carries 20p of tax (VAT at 5%). The tax on petrol or diesel is about 60%, so £7.20 for petrol and £6.00 for diesel. The net loss for a typical 10,000 mile per year motorist is in the order of £650 – plus the road tax loss of around £100 or more.

If just a million car users switch to electric – 3% of the total – then the loss is around £750m per annum.

 Will motorists actually go for these savings? Not if they look at the total costs of ownership. The life of the batteries will be less than the 100,000+ miles that you expect from a modern engine. Current lithium ion might give you about 300 charges, or 30,000 miles in the Mini E. With the cost maybe £6,000 per pack (for simplicity), that would add 20p per mile to costs – equivalent to annual costs of £2,000 per year. The servicing may cost a bit less (no engine, but still all the other mechanical bits like brakes, tyres, etc.), but overall the cost of ownership.

Therefore, it will only be a small minority who will buy these cars – probably the richer end of the Prius set. Alternatively, the government will step in to subsidise the battery pack. So the middle class conspicuous consumers will be subsidised by the, poorer, users of internal combustion engines.

Finally, will this save the planet within Lord Stern’s criteria cost of £80 per tonne of carbon? Let us assume somebody swaps their standard small car with 130g/km of carbon with the zero-emission car. At 10,000 miles per year, that is a saving of 2 tonnes of carbon IF the electricity comes from zero-emission sources. The net cost to society is going to be at least 10 times that, so it fails the economic test as well.

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