In order to shift the boundaries, develop a new sector and change buying habits that have become established over more than a century, public policies are essential.
Given the current situation, public policies are not always clearly understood, although this is the consistent expectation of 70% of the people interviewed for this study.
There are schemes to promote the electric vehicle, albeit on a variety of different scales. At the European level, Euro standards require manufacturers to reduce pollutant emissions from «tank-to-wheel», which in fact favours the EV. At the national level, most countries also promote the development of EVs using both coercive and incentive measures. The most polluting vehicles are discouraged by high taxes and low quotas while the registrations of clean vehicles like EVs are supported by various forms of subsidies.
Financial support for the transition
Most of the support measures concern allowances and subsidies to reduce the difference that still exists between the cost of an EV and its fossil fuel equivalent. Support schemes to finance charging station infrastructures and the implementation of public and shared e- mobility systems are also needed.
Today, the development of the electric vehicle cannot be done without strong and lasting financial incentives. «Indirect» support such as free urban tolls and car parks, or access to dedicated bus lanes, could provide the needed impetus. In Norway, there have been multiple ambitious public incentive measures. Public subsidies have made EVs cheaper, while urban regulations have granted them many car parking spaces and facilities. As a result, EVs now account for 21% of total sales. In contrast, when the subsidies are removed or reduced too quickly before the cost to run electric cars has dropped below that of fuel-powered vehicles, the sales growth stops. This is what happened, for example, in Denmark.
Comparative economic performance of EVs
Comparing the total cost of different energy solutions is not easy.
Many parameters have to be taken into consideration: purchase price of the vehicle (including tax), maintenance costs, fuel or electricity usage expenses, depreciation and resale value on the second-hand market, etc. For a product that is still relatively new and rare on the market, such as the EV, the future value and second-hand prices can only be estimated approximately. Most of the comparative studies, however, indicate that the total cost (i.e. purchase cost plus running costs) of EVs is still higher than that of fuel-powered vehicles, but that this cost is shrinking rapidly. The European Consumer Organisation concluded that in a comparison between the fossil fuel Opel Astra and the fully electric Nissan LEAF, the total cost of the latter was 8% higher in 2015. This difference will drop to 4% in 2020, and then to 1.5% in 2025, to represent only 0.5% by 2030.
The changes in the price of oil and its taxation as well as the fall in the price of batteries, which account for half the price of an EV, will determine the exact rate of convergence. Obviously, these results deserve to be broken down by type of user, especially according to the annual mileage.
The higher it is, the greater the incentive will be for the motorist to bear an additional cost on buying the vehicle in order to recover the cost during its use.
To smooth out these ongoing price differences when buying a vehicle and resolve the uncertainty associated with the residual value of an EV and its battery, long-term leasing, with or without an option to purchase, can be a great alternative to the conventional option of buying the car outright. The investment is smoothed out over time, the maintenance costs are known in advance and the distributor is contractually liable for the residual value of the EV.
It’s time to charge
Because the battery of the electric vehicle must be regularly recharged, having access to a charging point is an advantage. For people living in a house, it is easy to install a charging device, and particularly easy to recharge a vehicle overnight. For the residents of a block of flats, it will be preferable for the car park to have a network connection. If this is not the case, the regulatory framework could facilitate this. Another option is to recharge the battery at the workplace. Here again, appropriate regulations and taxation would speed up the deployment of charging points in the corporate world.
However, having access to a charging facility at home or at the workplace will be insufficient to fulfil every need – particularly that of reassuring those who are more concerned about running out of power. Given the current range limitations and the impossibility of replacing an empty battery with a full battery, it appears that a road charging network will have to be deployed to reassure those who are hesitating to get an EV and those motorists who need a single vehicle for every type of journey. What’s more, such an infrastructure will require particular specifications. Ideally, quick – and therefore more expensive – charging stations will be required, especially on motorways. Then, a typical «chicken and egg» problem arises. Charging stations will only be installed if enough EVs plug in to make them profitable, but there will only be enough EVs if there are enough charging facilities on the roads… The public authorities must, once again, take measures to bear some of the risk and costs borne by the motorway operators and energy providers. In 2016, the number of public charging points increased at the same rate as the number of EVs on the roads. The vast majority of EVs were being recharged on private roads.
Facilitating e-mobility systems
The experts agree that the EV will be all the more attractive economically and environmentally if it is used intensively. We’re thinking of the last mile when delivering goods in a city, the shared fleets of company vehicles or even those used for shared mobility services (carsharing fleet). Thus, the coordination and structuring of public policies at the national and local level – cities and urban hubs – are essential for the promotion and development of the EV. On the one hand, the increase in volumes generated by these shared EV offers will reduce battery production costs through accelerated economies of scale. On the other hand, it will prepare public opinion and motorists and get them used to the idea, thereby influencing their future personal choices.
Current examples of policies to promote electric vehicles
Much more than just protecting the environment
Whether it is saving the planet, improving air quality in the cities or reducing the dependence on oil without simply transferring this dependence onto another energy source (e.g. nuclear), there are many challenges to overcome that are of utmost importance for governments. However, the plan to build up an electrical sector while another is dismantled (i.e. the fuel-powered vehicles) will take time and must be managed with skill. Otherwise, the European car industry could, for example, suffer from the decline in its sales of fuel-powered vehicles as they are replaced by EVs imported from China… the Middle Kingdom is driving this market more than any other country in order not only to improve the air quality of its cities, but also to impose its industrial clout in this sector.