Bribing people to buy electric cars is folly
Peter Gorrie
Green Wheels
Last year, Premier Dalton McGuinty's government offered $4,000 to $10,000 per electric vehicle, depending on battery size. Britain's top gift isn't quite so generous: It will amount to 25 per cent of the purchase price, up to the equivalent of $7,800, on vehicles that meet certain performance and safety standards.
To be eligible, cars must, for example, be able to hit at least 96 km/h. All-battery models require a minimum range of 113 km, while plug-in hybrids must be capable of 16 km in electric-only mode.
Fuel economy, of course, isn't an issue with all-battery vehicles, but the hybrids must do better than a stingy 3.1 L/100 km (75.9 mpg).
As with the Ontario giveaway, this seems like a purely good news item. But, again, as here, critics are stomping on it.
Some bleats are coming from British companies that make slow-speed electrics, similar to our now-abandoned Zenn. As is the Zenn, they're too slow for giveaways that demand highway capability.
Others complain the only two cars that will qualify for the grant in the near future are beyond the reach of most buyers. The Tesla Roadster is a tiny two-seater that sells in Britain for roughly $135,000. Mitsubishi's i-MIEV has a more reasonable but still hefty price tag – about $39,000 – and little more room than a Smart Car.
The program amounts to a subsidy for the rich who like their toys – and for whom $7,800 won't determine whether they buy a Tesla – or a very limited group of early adopters who, given the limitations of the i-MIEV, must have spare cash to burn.
Things should improve in a couple of years, if Nissan's Leaf, Toyota's plug-in Prius, the Think City and the Chevy Volt's British sibling come on to the market as planned. Still, just like here, any buyers will belong to a high-end niche.
The British program will be worth about $360 million over four years, starting in 2011. If all the money is spoken for and if, as expected, each buyer gets the maximum grant (since the cars will all be quite expensive), it will cover 46,000 vehicles.
How many would be purchased without the grant? Likely a high proportion.
What impact would sales of 46,000 units over four years have in a market where about two million are sold annually? Likely minimal.
Could a better use be found for the money? Certainly, and if it's to go toward developing electric cars, direct investments in the technology are more likely than purchase subsidies to attract jobs, if that's the goal, and to bring better, less expensive cars to the marketplace sooner.
Britain is far from the GTA, but its new program is a reminder that we're making the same mistake here. It's off our radar screens because Ontario's rebates don't kick in until July and it will be a while longer before there's anything to buy.
Once upon a time, computers were virtually useless and cost a small fortune. I don't recall governments helping people to buy them. Yet today, they're everywhere and they're cheap, with prices continually dropping as capacity and performance improve by leaps and bounds.
Bribing people to buy electric cars won't determine the fate of these vehicles. If they make sense, they'll eventually sell.
But grants and rebates are too enticing a public-relations hit for politicians to resist.
It would have been better if Britain had opted not to copy Ontario and the others.
Here's hoping, but not expecting, it's the last.