The government is keen to reduce CO2 emissions and so gives drivers incentives to switch to electric cars. But what would happen if everyone switched to an electric car?
Reduction in Costs
Motorists these days are trying to cut the cost of driving in various ways and dropping a conventional vehicle in favour of an electric one would bring obvious fuel , road tax and car insurance savings.
If everyone drove an electric car, however, there would be some serious changes in industry and taxation.
Tax Lost by UK Government
A total conversion to electric cars would present the Exchequer with some serious issues. Tax is payable on car insurance premiums and as insurance on electric cars is on average 5% cheaper, this would mean a loss to the government of around £37 million per year.
There are electric cars everywhere (like these two Tesla models just leaving the assembly line). However, what if there were ONLY electric cars?
But it gets much worse for the government. With such vehicles being exempt from the London congestion charge, they would lose a further £130 million annually. Ramping up the losses further, exemption from road tax would cost £4.8 billion.
These losses however are dwarfed by the loss of fuel duty, which would cost a staggering £19.5 billion. Even taking into consideration the taxes from increased electricity consumption, the net tax loss for the UK government is around £24 billion per year.
What Does The Driver Save?
With huge figures such as these, you would expect there to be a trade-off in terms of savings for the drivers of these electric vehicles. There are indeed cost reductions, but they might not be as substantial as you would expect.
Based on average fuel costs, fuel consumption of 52.5mpg and average mileage of 8,430 per year, electric motorists would save £773.18 on fuel per year. The zero-rating for road tax would mean additional average savings of £155. On top of this there is a small £23.90 saving on average annual car insurance costs. This gives a total annual saving of £952.08.
The Environmental Implications
While the savings in financial terms to the average driver would no doubt be welcome, they are hardly life-changing. The real impact is surely on the environment and CO2 emissions in particular.
Electric cars are not truly emission free. They do rely on electricity to charge their batteries and that electricity is produced using a variety of sources. In 2010, for example, 77% of UK electricity production came from burning fossil fuels. Clearly this produces CO2 emissions.
Even so, figures show that around 59 billion kilograms of CO2 are produced in the UK annually from our petrol cars, as opposed to the roughly 30 billion kilograms that would be emitted if they were all electric. That is a reduction of approximately 50%.
Should We Go Green?
Obviously, there are a number of factors to consider when weighing up the move to electric cars. There are still technical issues to overcome concerning the range of such vehicles, recharging times and availability of charging points.
The loss of tax revenue to the Exchequer would be enormous and almost certainly unsustainable. That means the government would have to make up that loss somehow and introducing road tax for these electric vehicles, along with congestion charging, would seem inevitable.
The biggest loss for the government comes from fuel duty and it would also seem logical that the government would be forced to introduce a tax on electricity used for charging vehicles. If these changes were introduced, it would mean savings for drivers would quickly disappear.
The reductions in CO2 emissions due to a switch to electric vehicles would be impressive. These would have to be considered in the wider context of worldwide emissions before any conclusion could be drawn. It is perhaps a good thing that a change away from petrol-powered cars will happen more gradually.
