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Electric Cars: Magic Policy Wand Won’t Achieve The Impossible

Martin Livermore, Scientific Alliance

The number of electric cars sold in Britain has fallen by a third since the start of the year, amid concerns that motorists are being put off by high prices, limited battery range and a lack of roadside charging points.

These are the opening words of an article in the Times this week (Electric car sales tumble over price and plugs). The question is, are these just inevitable teething problems or are the plans for a grand phase out of internal combustion engines fatally flawed at this stage of technology development?

This is a young market and doubtless prone to hiccups, and a key factor in its growth is government policy. In the UK as in many other countries sales of electric vehicles are subsidised to develop the market. At present, this means a grant of £4,500 per car, which cynics might categorise as rich consumers being given a price reduction by poor taxpayers, since the majority of purchasers are comparatively affluent first adopters. Since the claimed advantages of battery power are also more relevant to urban areas and relatively short trips, this is also in part a subsidy for prosperous city-dwellers at the expense of their country cousins. In any event, this is a form of regressive taxation.

The future of this grant seems in doubt: the Times reports it is to end in April although it seems unlikely that the government will not extend it in some form. In practice, its absence might make little difference to the early adopters, who have made the pricy Tesla model S as common a sight on Britain’s roads as the more mainstream Nissan Leafs (Leaves?) and Renault Zoes. But affluent consumers who can afford to buy the latest toys and environmentally-conscious city-dwellers are not enough to create sustained growth and a switch away from petrol and diesel.

The Times article quotes figures from the Society of Motor Manufacturers and Traders, showing that less than a thousand fully electric cars were sold in the UK in the first two months of the year. The total for the whole of last year was 13,600, which sounds high but still represents just half a percent of total sales. More popular by far are hybrids. Over 11,500 conventional/electric hybrids were sold in January and February, of which more than 3,800 were plug-ins. This compares to just 990 pure electric cars.

Despite the relative popularity of hybrids, we should put this in perspective. The total number of hybrids and electric vehicles sold in the UK in the first two months of the year is just 12,500, or a tad over 5% of the total. There is no major shift in the market away from petrol and diesel engines. And to give a better gloss on the situation, governments, including the Westminster one, when speaking of the growing market for electric cars, deliberately conflating the various categories.

The reality seems to be that consumers who move from conventional cars are much more interested in hybrids that purely electric cars, and only about two thirds of hybrid owners are shelling out for the plug-in versions. Even these have severely limited range on battery; fine for short commuting, but the engine is certainly needed for anything more significant. Given that they come at a significant price premium to shorter range, non-plug-in hybrids, their market is currently limited.

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