When Will The Transition To Fully Electric Cars Really Be Rolling?
Credit to Author: Maarten Vinkhuyzen| Date: Thu, 22 Aug 2019 00:38:55 +0000
Published on August 21st, 2019 | by Maarten Vinkhuyzen
August 21st, 2019 by Maarten Vinkhuyzen
Recently, a commenter told me that I was far too optimistic, the transition to electric driving would not start before 2025. And we were both thinking in percentage market share.
Only, that is not the right way to think about it. The transition is only really happening when the fully electric vehicle (BEV) market share will keep growing without incentives interfering in normal market functions. The invisible hand should do its job.
When I define the real sustainable transition this way, not even Norway has started. In most countries, there are some motivated people willing to pay a premium for being environmentally responsible. Those people can bring the BEV market share to 1% or 5%. They are not numerous enough to carry the market to the high nineties needed for a complete transition.
While there is parity on the total cost of ownership (TCO) for a number of electric vehicles, compared to their fossil fuel competitors, none have parity on sticker price before taxes and incentives. Tesla is coming close in the USA, not so much in Europe for a number of reasons. The USA is missing any offerings in the 2/3 of the market where the large-footprint gas-guzzlers reign supreme.
With the USA at least 5 years away because of lack of models, and China transitioning by government mandate, the attention is on Europe. It will show us when the market can transition of its own accord.
Price parity is closer than many people think. The VW triplets I wrote about a few days ago come close to parity on sticker price when compared with small cars with the same capabilities — that is a flawless automated transmission and GTI performance in a luxury trim level. The only thing is high-performance automatics with luxury trims are hard to find in that class. The simple cars normally bought in that class are €5,000 or more lower in price. However, I think the price of each of these models will have an internal subsidy for the CAFE (Corporate Average Fuel Economy) credits these models generate. Also, there is some interest in the better models in that class, as the Lancia Ypsilon shows.
Image courtesy Vauxhall.
I did look at the Belgium prices for the Corsa and 208 models to compare the electric and gasoline versions. The Belgium prices have less distortion from special taxes and carmaker margin compensation for those taxes. I tried to compare the same level of options, with the only difference being the electric motor replacing the gas engine. Generally speaking, comparing the lowest trim levels of gasoline and electric versions of a model is not realistic. Electric versions come with more creature comforts and a nicer driving experience.
A high-quality automatic transmission is €4,000 extra over a manual, and the same amount of horsepower also adds a few thousand euros. Those extra options don’t even give you the one-pedal driving or instant awesome torque of an EV. Also, the luxury and infotainment on the lowest electric is 1 or 2 trim levels above the base level of the gasoline line.
The Corsa is about €23,500 for gas and €29,200 for electric. But electric has a special offer of €299/month for a personal lease for 60 months and 10,000 km/year. That is including taxes, insurance, maintenance, roadside assistance, loaner in case of accident. Only electricity is for the driver. This is really an offer better than the comparable fossil fuel version. The same offer is €499/month in the Netherlands.
Image courtesy Peugeot.
The Peugeot 208 is about €19,000 as a FFV and €30,000 electric. For an explanation of these differences and the much smaller Corsa differences, visit a dealer or call the marketing departments — those differences mystify me.
As Opel shows, the European-style private lease, very comparable to the full operational lease of the fleet management contracts companies use, is an excellent way to offer an electric car for the TCO price instead of the sticker price. All of the advantages of lower maintenance, lower depreciation, and lower insurance can be made available to the driver from day 1. No need to finance an expensive car and recover those costs from lower operational expenditures over the course of many years.
Image courtesy Volkswagen.
Back to the original question. The question of when the transition will really start has become the question of when the transition will be sustainable without government support. Here are some answers:
Maarten Vinkhuyzen Grumpy old man. The best thing I did with my life was raising two kids. Only finished primary education, but when you don’t go to school, you have lots of time to read. I switched from accounting to software development and ended my career as system integrator and architect. My 2007 boss got two electric Lotus Elise cars to show policymakers the future direction of energy and transportation. And I have been looking to replace my diesel cars with electric vehicles ever since. And putting my money where my mouth is, I have bought Tesla shares. Intend to keep them until I can trade them for a Tesla car.