Last year, transport secretary Grant Shapps bought himself a £44,000 Tesla, courtesy of a £3500 grant, which he says he loves. What price might the rest of us now have to pay for his enthusiasm? This week the government announced that it is to ban the sale of new petrol and diesel cars from 2035. The ban will also extend to hybrids, which is rather a shame as they could help shift motorists towards going electric, by sidestepping the problems of limited range and a shortage of charging points, Shapps himself gets round the problem by hanging onto his 15 year old gas-guzzling Chrysler Crossfire (22 mpg according to the website Fuelly, which works out fuel efficiency from data provided by owners).
That just about sums up the current market for electric cars: it is dominated by well-off motorists buying themselves second cars in order to show off – or to avoid charges now being imposed on petrol and diesel vehicles. Shapps himself has said one of his motivations was to be able to continue to drive into Central London after the imposition of the Ultra Low Emissions Zone. There are two problems to be resolved before electric cars can go mainstream, and there is no guarantee that they will be resolved over the next 15 years: the high purchase price and the limited range. Battery technology is not advancing at a rate which suggests it will be possible to match a petrol car for range in the near-future. Nor is there any guarantee that the price of batteries will come down, given that they require rare metals, some of them – like cobalt, half of which is mined in the Democratic Republic of the Congo – have limited supplies.
If you compare the buying and running costs of a petrol Nissan Micra with an electric Nissan Leaf it doesn’t come out too badly. Buy it new and run it for 10 years, driving 10,000 miles a year, and the Micra will cost £28,630 (£14,190 purchase price plus £1450 road tax plus £2090 for servicing plus £10,900 in fuel). For a Leaf it works out at £31,435 (£26,345 purchase price plus £1590 servicing plus zero road tax plus £3500 in electricity). However, those figures miss out something rather important: electric cars, at present, are virtually tax-free – with just five percent VAT on electricity. Owners of petrol and diesel cars, by contrast, pay road tax and high excise duties and VAT on fuel. At present, 60 percent of what motorists pay at the pump is tax. Presumably the Chancellor is not going to sit around while the tax base from cars is steadily eroded – the taxes which are paid today by owners of petrol and diesel vehicles are somehow going to be transferred onto owners of electric vehicles, whether through road-pricing, road taxes or whatever. It will also – as Shapps has already hinted – one day abolish the grants paid to people who buy new electric cars.
To get a true comparison of the cost of running an electric car you need to add around £11,000 to the cost of buying and running a Nissan Leaf over 10 years (£3500 for the purchase grant, £1450 for the road tax and £6000 for fuel tax). This changes the figures considerably: £28,000 for the petrol car versus £42,000 for the electric one. Unless the cost of batteries falls sharply there is a serious danger that the government has this week condemned motoring to go back to what it was in Edwardian times: a hobby for the wealthy, but out of the range of ordinary people. That is not going to go down well with the Conservatives’ new voters in northern and midlands constituencies.