Tag Archives: Tesla

Subsidies to Electric Vehicles – Are They Justified?

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Tesla Model 3

There was a good article in the Investors Chronicle last week covering the subsidies to electric vehicle manufacturers from the Government, particularly to Tesla.

In 2020 the Department of Transport paid out at least £61.5 million lowering the price of new Tesla vehicles to the purchasers. Since 2011 the government has spent at least £1.1 billion by providing up to £2,500 per vehicle to manufacturers of electric cars. Tesla has been the biggest recipient of this largesse.

But with the price cap on which vehicles qualify being reduced to £35,000 when the cheapest Tesla is the Model 3 from about £40,000, this subsidy is likely to disappear unless Tesla reduce their prices which they seem unlikely to do.

Are such subsidies justifiable? Effectively the Government is using the taxes you pay to subsidise the purchase of expensive vehicles which only wealthier people can afford to buy. Introducing a lower price cap certainly makes sense, but it is surely questionable whether such subsidies should be paid at all when the Government is so short of money as a result of the Covid epidemic..

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Wallets on Wheels, and Electric Cars

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A couple of interesting articles in the Daily Telegraph today (13/7/2017). Firstly there was a report on the comments on parking revenues from AA President Edmund King. He said that local authorities are reducing their expenditure on road maintenance and street lights while increasing parking charges that normally help to finance them. Specifically, he said “Far too often drivers are viewed by every level of government as wallets on wheels”. How true that is. The Greater London Authority made the largest reduction in expenditure at £59.5 million, way ahead of the next largest of £6.2 million in North Yorkshire.

Another article was on the potential demand for electric power if the number of electric vehicles grows as expected. Certainly in London the Mayor’s recent Transport Strategy document (see https://freedomfordrivers.blog/2017/07/07/mayors-transport-strategy-an-attack-on-private-transport-with-dubious-economics/ ) suggests that by 2050 most cars will be electric – at least they will be if the Mayor has his way. The Telegraph article suggested that this might add 30% to peak electric power demand, thus requiring the equivalent of five Hinkley Point C nuclear plants according to National Grid. See publication entitled “Future Energy Scenarios” issued by National Grid. Even if people only charge their electric cars in off-peak periods, the additional demand could be very substantial. As I plan to attend the National Grid Annual General Meeting later this month, I may ask some questions on how they plan to cover this.

But readers may be interested to know that I am planning ahead on this issue and recently had a test drive of a Tesla Model S. A very impressive vehicle altogether and obviously getting near the point where electric vehicles are practical for most car drivers. Somewhat expensive at present as it’s really aimed at the luxury car market, but Tesla announced the first production deliveries of the new Model 3 this week which will be substantially cheaper (not yet available in the UK). One can see that in two or three years time, all electric cars will be a viable proposition for most drivers, particularly if the costs come down as expected. Volvo announced this week that all their new models after 2019 will be electric or hybrid so you can see the way the wind is blowing.

But that still leaves the problem of generating all the extra electricity, particularly when the wind is not blowing and the sun is not out. To meet the demand in the timescale required might simply result in more cheap gas power stations, not nuclear. I am yet to be convinced that this migration to electric vehicles makes much environmental sense because of the inefficient energy conversion involved in comparison with a modern petrol engine. We might end up with more air pollution rather than less, although the Mayor of London will no doubt ensure its not on his patch.

Roger Lawson

Media Coverage of Air Pollution and Electric Vehicles

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With the Mayor of London’s plans for the ULEZ, his new Transport Strategy and the Government about to publish their air quality plans for cities, the issue of air pollution has been getting a lot of media coverage of late.

The Evening Standard ran an article by David Williams on the 28th June headlined “Don’t punish the car drivers for air pollution when other causes are worse”. The article said that making motorists pay punitive charges will fail to achieve major cuts in London’s pollution. This is the argument put forward by campaign group FairFuelUK who say it is more about raising cash as the revenue raised is not ringfenced to tackling emissions or congestion. One cannot but agree with them.

They also suggest that politicians are aiming for the wrong target by focussing on private cars which contribute only 11% of NOX emissions when 16% comes from gas central heating, 14% from diesel machinery and a lot from LGVs. Other sources are air traffic, air conditioning and HGVs. They also complain that local authorities have failed to cope with particulates that are left on roads by tyres and brakes.

FairFuelUK are asking people to write to Michael Gove and Theresa Coffey on the prospective additional taxation of diesel cars while promoting alternative solutions. For example, instead of an expensive diesel vehicle scrappage scheme they suggest retrofit devices can solve the problem on most vehicles. In addition, they push for the adoption of E10 fuel (an ethanol/petrol blend) which most cars can run on perfectly well and is widely available in other countries. They also promote the use of additives to reduce diesel emissions as is mandated in Texas. This can cut NOX emissions by 67%, and reduce other pollutants also. It does seem there are a number of other possible solutions that would be both cheaper and more effective than taxing motorists or forcing them to replace their vehicles – as Sadiq Khan is doing in London.

You can read about the FairFuelUK campaign here: http://act.fairfueluk.com/lobby/Defra-Plan .

I would encourage you to support it.

In the Financial Times on the 8th July there was a good article by Neil Collins on the unforeseen consequences of the push for electric cars. It was headlined “Electric cars are a pain in the wallet for those who don’t drive them”, and it spelled out the wonders of such vehicles.

But the downside is the loss of fuel tax to the Government (£28 billion per year and rising), while electric vehicles are subsidised by the Government. In addition, there are major problems in developing the electricity supply grid to cope with future demand. He says “The energy transfer at a busy filling station is about equivalent to the output of a mid-sized power station” and goes on to explain the energy inefficiency of electric cars due to high distribution and storage costs. He notes that: “Electric cars are gathering speed thanks to politics rather than economics”.

This writer has so far avoided the lure of electric or hybrid vehicles simply because the economics did not stack up. A Prius might work well for a high mileage Uber driver and all electric vehicles have historically had problems of range, recharging time and cost. But they are getting better. I am having a test drive of Tesla Model S next week so I may be able to report my impressions in due course.

Roger Lawson