Driving Decisions on Buying Electric Vehicles

Posted 4 April 2018 by David Spratt

Last month’s article on electric vehicles elicited responses ranging from “hippy, coombyah, PC, Greenie horse poo” through to “Where can I get one of these gosh darn, new-fangled, electric buggies?”. Thanks to you all for your feedback.

Rather than take sides in the debate about whether or not we should be buying electric vehicles, let’s examine the drivers that inform the decisions we will all make around which vehicles our companies buy.

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Electric vehicles are expensive. Buying electric vehicles today, we can expect to pay BMW prices for Corolla performance. As production volumes rise we can expect this delta to shift to equilibrium. In the meantime, expect FBT to be high on the financial controller’s agenda.

Fuel costs

Petrol costs around $2 per litre. An electric vehicle equivalent is 30 cents per litre. For the average company car fleet, this is a huge saving. Expect changes though. The government taxes the heck out of petrol and diesel and will likely move to Electric Vehicle road user charges to protect their revenues. If the IRD is true to form you can expect the tax per kilometre to be the same in the future as it is today, regardless of the vehicle type you choose.

Resale value

Last month five German cities announced bans on diesel vehicles. A court ruling means many others may follow suit across Europe. This has seen the resale price of second-hand diesel cars in Germany plummet as up to 12 million diesel vehicles will be forced off their roads by 2020. We can expect to see residuals becoming a major question for procurement managers as the popularity of second-hand petrol and diesel vehicles declines across the world.

Servicing

Electric vehicles have around 20 moving parts compared to the 2000 parts we find in the average sedan. This translates into far greater simplicity, reliability and with that, much lower service charges. Expect huge changes in the way new cars are sold and serviced in the years ahead. Lifetime warranties and free service schedules anyone? Finding a trained electric vehicle mechanic might be a trick though.

Insurance

Insurance companies are looking with a jaundiced eye at the high price of buying electric vehicles and more significantly at the cost of repair. If you prang your $120,000 Tesla there is currently no repair facility in NZ. Your insurer will need to ship your pride and joy to Australia or write it off. That’s a recipe for weeks off the road and higher insurance premiums.

Range

Assuming you keep the air conditioner off and aren’t stuck in traffic, the average new electric vehicle has a range of around 200kms fully charged. This is less than half the range of an average petrol-powered car. A private car only travels 40kms per day on average and range will get sorted in time. Right now, though, most company cars don’t have the luxury of sitting around in the garage or being stranded on the side of the road.

Charging

It takes quite a while to charge an electric vehicle, from 30 minutes at a fast charge station through to twelve hours on a single-phase home connection. Add to this the lack of fast charge facilities and questions around just how well our distribution grids will cope with the peak demand of 3 million electric cars charging while we are cooking dinner and the industry faces quite a few challenges.

Choice

Today there are around 30 new electric vehicle car models available in New Zealand, compared with literally hundreds of petrol and diesel cars. By the end of next year, the number and quality of new electric vehicle car models will rise to over 100 while petrol and diesel choices will fall. Expect this trend to continue.

Lack of information

Finding unbiased data on electric vehicles is tough and in many cases, the information is contradictory and confusing.

One place you can all go for well-presented, easy-to-understand information is the Energy Efficiency and Conservation Authority (EECA). It is biased in favour of electric vehicles but nonetheless, it provides useful facts as you evaluate your options when considering buying electric vehicles.

This article is the second part of a series on electric vehicles. Part 1 explored the business case for electric vehicles. Next month I will look at the impacts of putting several million electric vehicles onto an already complex electricity grid. I will also explore the ways our government and our electricity industry is likely to respond to these challenges.

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