VW e-golf
Source: VW

The total cost of ownership of electric vehicles in Europe is now cheaper than owning its petrol or diesel equivalent model, a new report says.

Looking at a complete range of cost factors in five European countries in owning a VW Golf, researchers found that over four years the battery electric (BEV) and plug-in hybrid (PHEV) versions of Europe’s most popular passenger vehicle is cheaper to own.

In France, Germany, Norway, Netherlands and the UK, the battery electric VW e-Golf costs less to own when taking into account the base price of the vehicle as well as on-road and tax costs (not charging off solar and including a 3-year company car benefit).

The International Council on Clean Transport (ICCT) that issued the report says that based on the figures, taxation incentives are the way to go to encourage zero emissions vehicle uptake, and that financial bonus schemes to reward drivers for choosing zero or low emissions vehicles also play a role.

The report is extremely salient for Australia, which as has been noted repeatedly is the world’s laggard in EV uptake.

There are neither tax savings for investing in zero emissions transport nor financial incentives in Australia, and the major parties rejected such proposals even though the recent Senate report from Senator Tim Storer recommend such.

Also unlike Europe, Australia does not even have any transport emissions standards, as was noted in the Climate Council’s report ‘Waiting for the Green Light: Transport Solutions to Climate Change’ released in 2018.

For France, Germany and the UK, the cost of ownership for EVs is significantly less thanks to bonus payment schemes – €6,000 ($A9,573) in France, €4,380 ($A6,988) in Germany and €5,100 ($A8,137) in the UK.

Germany and the UK also have financial incentives for buying PHEV – €3,285 ($A5,241) in Germany and €2,800 ($A4,467) in the UK.

On the face of it, this suggests that a bonus incentive scheme is key to ensuring EV uptake – but in the Netherlands and Norway there are no bonus payment schemes – instead, a higher rate of taxation for high emissions vehicles is in play.

For example, the report finds that the tax savings on owning a BEV for Norwegians over 4 years is in the vicinity of €40,000 ($A63,821) – compare that with the UK’s relatively lax penalties for owning high emissions vehicles, where the savings on owning a BEV are only €9,300 ($A14,838), or in Germany where the savings only amount to €6,000 ($A9,573).

While in France the savings on owning a BEV are in the vicinity of €19,000 ($A30,315), the same cannot be said for PHEV – and in the absence of financial incentives for plug-in hybrids, the VW Golf GTE PHEV was actually the most expensive.

Figure 20. Comparison of four-year consumer ownership costs and three-year tax on company car benefit.
Figure 20. Comparison of four-year consumer ownership costs and three-year tax on company car benefit.

Figure 20. Comparison of four-year consumer ownership costs and three-year tax on company car benefit.
Figure 20. Comparison of four-year consumer ownership costs and three-year tax on company car benefit.

 

So what are the implications?

The ICCT report highlights that while financial bonus schemes at the time of purchase significantly decrease the cost of ownership for EVs, the role that income tax savings based on vehicle emissions has played in Norway and the Netherlands cannot be understated.

In Norway, EV market share is now at over 40% with over 200,000 EVs on the road, and the Netherlands saw EV uptake triple in 2018 bringing it to the fourth highest in Europe at over 5% market share.

For Australia – where EVs account for less than 1% of the passenger car market and it is overall still far cheaper to own an ICE vehicle than an EV – the disparity in cost of ownership for the moment largely lies in the higher price of electric cars.

With cheaper EVs entering the Australian market this is set to change, and with battery prices expected to drop over the next decade this will also continue to cut EV ownership costs.

But without any real stance on emissions or financial logic to buying electric cars, Australia still has a long way to go.

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