There’s been more news recently about the cost of electric cars – with the BVRLA today warning that manufacturers need to cut prices if they want to energise the market. And let’s not forget that the Top Gear boys love to talk about the costs of an electric car – and not very favourably either!
With just 812 buyers taking up the UK Government’s generous £5000 car grant so far in 2011, has the “year of the electric car” failed to materialise?
Last year we took a (admittedly simplistic) look at the relative costs of running an EV in comparison with a low cost petrol (you can read that here.) We thought it about time to look again at the costs of running an electric car and an equivalent diesel-powered car.
It is fair to say that the majority of people in the UK will not make the switch to electric power unless there’s a clear cost benefit in doing so – while no doubt many of us would like to make the switch on environmental grounds; it is cold, hard cash which is the largest determining factor.
With this in mind we’ve looked at the costs of buying and running a Volkswagen Golf 1.6 TDI Bluemotion and the Nissan LEAF. In many respects they are similar cars – both five door hatchbacks, both offer good rear seat space and legroom, and both are well built, safe cars (both score 5 stars in Euro NCAP crash tests).
It is well documented that the Nissan LEAF is pricey – even with the £5,000 grant – it retails at £25,990. However, the Volkswagen Golf Bluemotion is hardly a cheap small family car either, sitting close to the top of the Golf price list, it retails at £19,430. Currently both cars benefit from zero rate VED (road tax), thanks to the Golf’s CO2 emissions coming in at 99g/km. Both currently qualify for the London Congestion Charge exemption too. Obviously the real benefit of the electric LEAF is that it doesn’t need any diesel to keep it rolling.
Therefore we have looked at two scenarios – a comparison where both cars travel 10,000 miles a year (the average distance travelled by a car in the UK) and 6,000 miles a year (which is probably a more realistic Nissan LEAF distance).
At the higher annual mileage, the £6,560 difference between the two cars means that it is only in the sixth year that the combined retail price and fuel costs of the Bluemotion are comparative to the retail price of the LEAF. This is based on the current diesel average price of 139p per litre and 10% fuel price inflation each year. We have also been generous and assumed that electricity cost for charging the LEAF are negligible.
If we take the lower annual mileage figure of 6,000 miles then it takes even longer to make financial sense – about eight and a half years. The Golf requires less fuel as it is travelling less distance so the cost of fuel is a less important factor than in the higher mileage scenario. Whatever the annual mileage, the motorist has to wait a significant length of time for the LEAF to cost in.
The real world is definitely more complicated though – with servicing and insurance areas where differences between the two models will crop up. Perhaps cheaper servicing for the LEAF and cheaper insurance for the Golf? However the overall result should not change too much, looking purely at the cost of ownership between the two models it will take between six and nine years of ownership for the LEAF to become financially beneficial to the private owner. Therefore at the moment for the private individual there needs to be a non-cost motivation to make the switch – perhaps being an early bird switcher to electric has its appeal or perhaps environmental concern is the overriding factor with cost not an issue.
So what can be done?
Firstly, the Government grant of £5,000 needs to remain in place beyond the current cut off point in 2012. With only 812 cars bought through the scheme only £4.06m of the fund has been allocated.
Secondly with more manufacturers entering the electric vehicle segment the increase in competition should help cut retail prices. Thirdly, the Nissan LEAF, including its battery, will be British-made from 2013 onwards which should assist in making it more affordable – at the moment they’re shipped in from Japan.
And fourthly, in my model I’ve assumed fuel inflation of 10% per annum however it is highly volatile and could increase significantly over the medium term, the faster the price of diesel increases, the quicker the pay back for switching to electric…
