Low Voltage

Is the £5k electric car grant enough to tempt people away from internal combustion?

By Tim Kendall | 9th November 2011

Is the £5k electric car grant enough to stimulate sales, or are the batteries running out for the electric car movement?

You could be forgiven for thinking the electric car buzz has been a bit quiet of late. That’s perhaps because, like the cars themselves, the sales figures haven’t been making much noise on the showroom floor.

So what’s going on? Well, let’s look at where we are first. The tuts about CO2 emissions from the anti-car and environmental lobby have been getting louder for years, but instead of doggedly clinging onto internal combustion, the car companies have actually done something about it. And they’ve done more than just tinkering around the edges with one-off tomorrow’s world concept stuff.

Nissan, for example, has sunk around four billion Euros along with sister company Renault, into developing a range of pure electric vehicles (‘EVs’) which will be on sale over the next two years. BMW is also on track to release a range of pure and hybrid electric vehicles under the ‘i’ sub-brand, starting with the rear wheel-drive i3 hatchback in 2013. Volvo, too is waiting in the wings with an electric C30, complete with bio-ethanol passenger heating. The inertia, then, isn’t coming from manufacturers it would seem.

Neither is it down to the cars themselves – they work. First out of the blocks was Nissan’s LEAF, the first bespoke, ground-up pure electric vehicle to enter mass-production. And that car has seemingly done the unthinkable – won the respect of car journalists the world over, not to mention the accolade of European Car of the Year 2011. It’s even got the Hollywood set clambering to bask in the glow of its eco-glory, snatching Toyota’s Prius-shaped halo. So it’s good, and it works….in theory.

Nissan Leaf

Nissan's LEAF is good, but the infrastructure needs to catch up

Like any technology new to the mass-market, even more so one that demands a sea-change in consumer behaviour, it will only thrive if it’s a compelling alternative to the status quo. For the electric car movement to gain traction it needs more than positive reviews and a handful of early adopters to stoke up the fires. It needs the right political and socio-economic environment. The government expects to see thousands of electric vehicles on UK roads by 2015, but judging by the early signs, the EV movement is still struggling to get out of first gear.

Yet it’s not for lack of government interest – there are plenty of civil servants working in Whitehall producing white papers and strategising about how to wean the British public off their addiction to suck-squeeze-bang-blow. Even in this era of never-ending belt tightening they have put their money where their mouth is and dug into the nation’s piggy bank, by subsidising the EV movement with the plug-in electric car grant.

Under the scheme, administered by the Office for Low Emission Vehicles (‘OLEV’), buyers of qualifying electric, and plug-in hybrids are eligible for a grant of 25%, or a maximum of £5,000 towards their purchase. A quick browse through the list prices of the current crop of electric vehicles reinforces just why this grant is needed – EVs are expensive.

Despite Nissan making a very good fist of it with the LEAF, they shifted less than 350 units in the UK in the first half of 2011. And it really is a good car, but that’s not enough to make people sit up and take electric cars seriously. There’s no escaping from the fact that it’s a deeply compromised Golf-sized hatchback with a list price of £25,990 – after the £5k grant has been deducted. Or, to put it another way, around £10,000 more than a conventionally-powered alternative.

The government has thrown other sweeteners into the mix – EVs don’t need that pricey little paper disc in the windscreen, and they can swan about the capital without having to pay Boris for the privilege. The fleet market is another interesting avenue – electric cars attract zero benefit-in-kind tax, making them effectively free for company car drivers.

Yet none of these incentives have put enough feet on showroom floors. When the grant was given the green light in 2010, manufacturers clambered to get their EVs ready for launch, whilst the SMMT gamely predicted sales of 8,500 in 2011. But the latest available figures from the OLEV show that only 680 plug-in car grants were taken up in the first half of 2011. That’s a take-up of just £3.4 million out of a total pot of £43 million which the government has pledged, until it reviews the funding in spring next year. Evidently, the £5,000 plug-in grant is vital to stimulate sales of overpriced electric cars, but there is an elephant in the room.

It’s more of a small herd of elephants, actually. The big one is range-anxiety. It doesn’t matter that the majority of British motorists’ journeys are less than 25 miles, because there just aren’t enough charging points by half. Think about the ‘practicalities’ of owning an electric car with a typical range of 90-110 miles (on a full charge). If you’ve plugged your EV into the national grid overnight – assuming you don’t live in a congested urban area where you have to park on the street – and want to travel to see a friend who lives, say 40 miles away, you’ll need somewhere to plug in when you get there. And you might need to outstay your welcome to allow for the typical 10-12 hour charging time, unless your chum has a fast-charge point installed at their home. You could, of course just choose to be friends with other electric car drivers who have fast-charge points. Or you could decide, like many people, that owning one of these ground-breakers is too much hassle by far.

Energy Secretary Chris Huhne may have stated the government wants to install 9,000 charging points across the country by 2013, but they haven’t really scratched the surface yet. A recent BBC report revealed that only 704 out of the 4,700 public charging points expected to be installed by the end of this year, are in place. In the same report it was revealed that two-thirds of towns with a population over 150,000 have no charging infrastructure at all. So it’s not hard to see why they aren’t selling. It’s a useful thing to be able to insulate yourself from oil price rises, but financial savings and good eco-intentions don’t help much if you run out of juice at the road-side.

The glacial roll-out of a proper charging infrastructure is, in part down to the failure to agree a common standard for pan-European EV plugs and charging sockets. This means many governments and local authorities are holding off on investing in new charging infrastructure until the standard is resolved. It’s a situation which looks likely to short-circuit electric vehicle sales unless it is sorted out quickly. According to the European Auto Manufacturers’ Association (‘ACEA’), that may not happen until 2017 – by which time the government optimistically hopes several hundred thousand EVs will be gliding serenely up and down our nation’s highways.

At the moment, choosing to buy an electric car because the government pay £5k towards it is a bit like buying an overpriced new-build house just because the builder pays the stamp duty. It’s the bigger picture you need to think about, and at the moment, EVs just don’t make sense to the end-user. Plug-in hybrids and range extenders would seem a far more palatable way of tempting customers away from conventionally-powered cars. Take the Vauxhall Ampera for example, which combines a 74bhp petrol engine with a 148bhp electric motor to provide a 311-mile range and a claimed 175mpg. Despite not being a pure EV, it will qualify for the plug-in car grant when it hits showrooms in 2012. Perhaps manufacturers need be pouring their R&D funds into more saleable cars that don’t force owners into a white-knuckle ride of range-indicator roulette every time they get behind the wheel.

The technology required to make cars like the LEAF go 100 miles purely on electricity, is very expensive, and there remains a big question mark over long-term battery life. Nissan claims the Lithium-ion batteries will last up to ten years, but also states there will be a gradual loss in capacity of up to 30% depending on driving style. Tellingly though, they only warrant the LEAF’s battery for five years or 60,000 miles, so resale values could be hit hard as cars reach their five-year anniversary. Oh, and a LEAF battery costs £8,000 to replace.

Such thoughts are possibly cold comfort to Nissan, Mitsubishi and other pioneers who may begin to rue the day they were so keen to be first to market with pure EVs. The stark reality is that the whole EV movement is running on trickle charge at the moment, just about alive. Unless the infrastructure catches up fast, the batteries might just run out.

By Tim Kendall
9th November 2011

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