Blog: Costly electricity
Dave Leggett | 22 June 2009
Prospects for plug-in electrics and hybrids continue to provoke much discussion in the industry. Last week, we heard that Daimler's electric Smart has been formally given the go-ahead to enter commercial production next year. The Smart Fortwo (sorry Daimler, but I have to capitalise brand and model names) is a curious one. It's perhaps an example of a car that was ahead of its time. In the looks department, it is much more acceptable now than it was back in the late 1990s. And a plug-in electric version seems to make good sense.
But the batteries are not going to be cheap. And that's a problem: who pays? Will the customer pay for that? The vehicle manufacturer? Will governments tinker with regulatory frameworks to encourage take-up? There seems to be a consensus in the industry that governments will have to play a part in helping electric cars develop significant market penetration. And, the argument goes, the government needs to do that as part of a broader energy policy that addresses overall CO2 generation, renewable power and economic or energy security issues. There's a lot to consider.
At some point though, the consumer is going to be asked to make a contribution to the additional costs associated with a battery pack and electric drive. Early adopters at initial low volumes may be fine with that. The interesting thing though will be the speed with which plug-in electric vehicles can become cheaper on a cost-per-unit basis as volumes become bigger. It will be something of a chicken and egg situation – which is why the regulatory framework is particularly important in terms of the fossil fuel relativities.
But would you pay almost GBP400 (USD650) a month to lease a Smart with electric drive? That's some premium to ask the customer to pay. How quickly can that sort of figure come down and to what extent will the government subsidise these vehicles? One point that should not be lost: in Britain the government takes plenty of tax from motorists at the petrol pump, way more than is required for investment in roads. And Her Majesty's Government needs every penny it can get, even if politicians like the sound of a greener electric future.
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