Big discounts and low running costs may not be enough

Critics are questioning the environmental benefits as well as the cost advantage

Last week Nissan opened up its order book for the Leaf electric car ahead of the first deliveries next March. As an incentive, the Leaf  will benefit from a £5,000 per vehicle government subsidy to retail at just under  £24,000.  Although considerable doubts have  been raised over the green credentials of electric cars (see PE 2 June) motorists still might have been expected to benefit from their low running costs. Nissan claims that the Leaf will cost about £1.59 per 100 kilometres to run.

But now that electric vehicles (EVs) are entering the mass market, critics are questioning not only the environmental benefits but also the cost advantage. Consumers purchasing electric cars will undoubtedly save money on fuel – a sevenfold saving may be typical when comparing the latest EV with a small 1.2 litre petrol engine car. But the high cost of buying an electric car combined with a rapid level of depreciation in value could mean that the financial benefits of EV ownership are at best negligible and at worst non-existent. 

According to estimates by carmaker Mitsubishi, its i-miev electric car, which costs almost £29,000, could devalue by almost £15,000 over three years. EV batteries do not last forever and replacements are expensive. 

Peter Cooke, KPMG professor of automotive industry management at the University of Buckingham, says that battery technology is developing rapidly but that even with the subsidy the economics don’t stack up. “I expect EVs to be attractive for a small part of the market – fleet buyers in urban areas – but hybrids will play an increasingly important role in the meantime.” Greater taxation on petrol or diesel engine cars could eventually swing the balance in favour of EVs, he adds. 

Environmental concerns have  been renewed by research published by the Swiss Federal Laboratories for Materials Testing and Research. Researchers found that petrol engine cars that do 70mpg, or less than 4 litres of fuel per 100km, are as environmentally friendly as typical electric cars charged from a mixture of nuclear, coal-fired and renewable electricity.  Some of the most modern fuel-efficient diesel cars, which might consume as little as 3.4 litres per 100km, could be considerably greener – and cheaper to buy – than your typical EV.

Motorists considering parting with cash for a ride down Electric Avenue may prove hard to win over when examining the benefits of EV ownership.