WWhenever people hear that I have an electric vehicle (EV), the conversation invariably turns to whether I suffer from ‘range anxiety’ – the fear of running out of battery. The answer is that I generally don’t, although I might if I were considering a drive across the Scottish Highlands to, say, Aviemore. But otherwise, no. Why? Because I can charge the car at home overnight, and most of my trips are much shorter than the car’s range of 500 kilometers.
In that sense, I am statistically normal. According to government estimates, 99% of car journeys in England are less than 100 miles. So if you can charge at home, most of your problems are over, which probably explains why the last time the Department of Transport surveyed, 93% of EV owners in the country were able to charge at home.
Unfortunately, there are many people who are not in that fortunate position. They live in apartment buildings or in urban terraces, not in detached houses with driveways. When they purchase an electric car, unless their car is made by Tesla (which has its own national charging infrastructure) – they are at the mercy of the UK’s public charging infrastructure. And that is – still – patchy at best. The government estimates that there were 53,677 public charging points as of January 1 this year, which it said “puts us at a growth rate consistent with delivering at least 300,000 charging points by 2030, in line with our projected charging demand.” Hmmm… that depends on how many of those charging points are functional at any given time.
Range anxiety is an understandable factor in dampening public enthusiasm for electric vehicles. “Consumers will be reluctant to buy an electric car until they see chargers everywhere,” says a Financial times article, “although they will probably use very few.” The reason that owners of conventional cars do not suffer from range anxiety is that there is always a gas station within easy reach. Another downer is the costs: new electric cars cost more (sometimes a lot more) than cars that run on fossil fuels. And the second-hand market for them is still relatively small and underserved.
But that is changing; it is expected that 80% of EV purchases will be on the second-hand market and prices will be comparable to their ICE (internal combustion engine) equivalents. So there will come a time when electric vehicles will no longer be special. This may be (slightly) better for the planet, but rather more problematic for the Treasury, which now gets significant tax revenue from fossil fuel sales and vehicle excise taxes. Currently, EVs pay no excise taxes and are very tax efficient for companies (the tax rate for the in-kind benefit is trivial compared to that for ICEs). They also cause as much damage to the roads as conventional SUVs due to the weight of the batteries. Their free ride at the Chancellor’s expense is coming to an end.
The long-term effects of a switch to electric vehicles are only now beginning to dawn on us. The internal combustion engine spawned a vast ecosystem of ancillary industries – garages, service centers, refineries, tankers, gas stations and so on – supply chains created to meet the needs of a 19th century technology based on heavy machinery, oil, petrol and exhaust fumes. By comparison, EVs are relatively simple machines – essentially large skateboards with wheels, powered by electric motors and controlled by software. They require less maintenance and different skills to serve them.
There is also an unexpected geopolitical aspect to the ICE transition that is beginning to unfold in Europe. There is actually a trade war brewing between the EU and China. How is that possible? Well, China is flooding Europe with electric vehicles. Over the past two years, the country has become the world’s largest car exporter. EVs make up a large portion of those exports, with the majority of Chinese EV sales going to Europe.
The European Commission says China’s share of electric vehicles sold in Europe has grown to 8% and could rise to 15% by 2025, based on prices that are often 20% below EU-made models. To Europeans, this looks suspiciously like dumping, and punitive tariffs may be necessary “to protect European Union producers from cheaper Chinese imports of electric vehicles (EVs). [that] benefit from state subsidies”.
Underlying this potential crisis is a strange dichotomy: the EU (and also Britain) has subsidized the economy. consumption of electric cars, while China, struggling with a consumer economy hit by the collapse of the real estate market, massively subsidizes electric cars production to boost exports and compensate for declining domestic demand.
This could be a very high stakes game. Higher EU import tariffs on Chinese electric cars would trigger retaliation from China – which coincidentally has a stranglehold on the supply chain of the electric batteries we so desperately need. This can get annoying: stay tuned.
What I’ve read
The Turing trap: the promise and peril of human-like artificial intelligence. A great long essay in the magazine Daedalus by Erik Brynjolfssen.
Davos: high altitude, low impact. A sharp, sardonic essay by Elise Labott on the ridiculous gabfest at Davos.
How to lead
Invest in underserved communities to fight populism. Thoughtful, insightful piece from economist Diane Coyle on what governments should be doing, but aren’t.