The sales of electric vehicles are growing slowly but steadily with many car drivers choosing their purchase over a petrol-driven vehicle. In the UK, for example, 2018 saw 5,000 new electric cars being registered every month (statistics from the Society of Motor Manufacturers & Traders). With many countries offering discounts on road tax plus financial help in installing a charger at home, they’re becoming a more attractive option for many car drivers.
How Will Electric Vehicles Affect Private Drivers?
Electric vehicles will affect how much their owners spend on their monthly transport expenses because of their running costs. Not only does it cost less to charge them than to fill up the car with petrol, but they also have much lower maintenance costs because they have fewer moving parts than an internal combustion engine.
Their impact on the environment is another clear benefit. Over a quarter of greenhouse gases produced in the US are a result of transportation and contribute to overall pollution levels. Electric cars have no emissions and make less noise so their increased use will mean cleaner and quieter cities and towns and improve quality of life.
The Effect on Government Revenue & Global Employment
The economist Tony Seba of Stanford University estimates that $50 billion of revenue from taxes on petrol will be lost when electric cars replace conventional vehicles. Governments will have to find this revenue elsewhere. All taxpayers might therefore find themselves with higher direct or indirect taxes, or vehicles might be taxed in a different way such as through congestion charges or road pricing (a charge for every mile traveled).
According to Joe Hinrichs, Ford’s President of Global Operations, electric cars need around 30% fewer work hours to make. A switch to these vehicles would lead to a reduction in workers employed in the car manufacturing industry. Apart from these job losses, all the secondary industries which support the car industry such as auto repair shops, petrol stations, etc. would see a corresponding drop in employment levels.
The Impact on International Relations
A dependence on oil has allowed oil-producing countries to hold others hostage because of their ability to disrupt oil supply. Freedom from this threat has the potential to revolutionize the geopolitical map and have severe economic repercussions for countries whose main or sole export is oil.
Electric vehicles are certain to improve the finances and quality of individuals’ lives but will also have far-reaching consequences for government funding, employment levels and the global economy.
One of the reasons why some drivers are reluctant to buy these cars is because of their higher price compared to conventional vehicles. However, personal loans are possible with a fast and easy online application on various websites. Once the purchase of the vehicle has been made, drivers will immediately start seeing the benefits in terms of lower running and maintenance costs.
It’s not clear exactly how the EV owners monthly bill will change, as they will pay less in “fuel” and maintenance, but more in loan repayment. Take for instance the €22,200 Renault Zoe EV and the equivalent €15,300 ICE equivalent Renault Clio, it’s €7,900 or 45% more expensive, and you still have to rent the battery €119 or €149 per month. This battery rental scheme was specifically designed to make EV financially comparable to diesel cars.
Or you could buy the car and battery for €32,000, i.e. €16,700 or 101% more expensive, with about €90 of extra monthly loan repayment over 5 years at 4.5% interest rate.
So we should not expect EVs to “improve the finances” of their owners, unless a real effort and investment is made, both on the government side (subsidies for buyers and funding for research) and on the manufacturers side, which have been severely lagging behind. Only then will prices go down enough that it will benefit owners financially. Mass production and technological advances will bring the price further down, bit by bit.
Another way to do so is to encourage photovoltaics: An EV will almost divide by 2 the ROI duration of your photovoltaic installation, according to the actual bills that some Tesla owners shared on forums several years ago already.
As for the petrol taxes lost revenue, you also need to count what’s been externalized so far, like the cost on the environment and on human health, mostly. It is also not clear in this case if this “lost revenue” is not actually a financial gain, all things considered. This question is all the more difficult to answer because it’s hard to put a price on human life, let alone health.
We will all switch to EVs eventually, but right now, the early adopters are paying a very steep price.