Electric Cars - Part 2

Who will buy one?

Considering the limitations on their use, namely their limited range and the purchase price I'm just wondering who will buy one of these first generation cars? I use the term first generation deliberately because although there have been electric cars for a while now, the 2011 cars are the first production models available in numbers to the public.

While it's certainly true that the running costs per mile are miniscule compared to the cost of a normal petrol or diesel powered car, I'm not certain that this is sufficient reason for most motorists to buy an electric car.

If we just look at the Nissan Leaf which has been launched in Europe, USA and Japan and has been voted The Car of the Year 2010 in a recent European wide poll, how many people are going to buy this vehicle and who are they?

The launch of a mass-production electric car in the market has been a much heralded event and in spite of the lack of a large recharging network and the limited range, the Leaf represents a technical and commercial wager by Nissan. The car is built on an accepted formula of a conventional 4/5 door hatchback but underneath it's powered by an electric motor. The rated range is 100miles which might be OK for a short daily commute but not for anything longer. The charge time is of the order of 8 hours.

Seen in this light the electric car is not a practical proposition but is still in the experimental stage. The object of an experiment is not to demonstrate something, but to see what happens, and the viability of the electric car can only be decided by putting it in the hands of normal users. So this is a pretty brave proposal by Nissan.

The second obvious criticism now is that the Leaf, like other Electric cars announced recently is pretty expensive. The UK on the road price is £28990 including the 20% VAT introduced in 2011. When the government grant of £5000 is deducted you are still going to be paying just short of £24000 for a vehicle which cannot take you from London to Birmingham.

So to return to the question: who is going to buy one of these? Several possibilities present themselves:

• As a second car by people who can afford to make a statement about themselves. Whether it is for environmental reasons or on grounds of fashion.
• By people who have accepted in their minds that the raison d'etre of motoring has changed and that we have entered a new age. The car is to be used for local short range motoring and only for that type of motoring. This does raise the secondary question of what happens when a long journey has to be undertaken.
• Someone who has more money than they know what to do with.

To see if running costs can provide a reason to buy a Leaf let's do a short comparison with a mid size competitor.

The running cost for the Leaf is quoted as around £1.80 per 100Km compared to £6.95 for a family 1.5Litre diesel. That is a pretty impressive saving by any standards.

Let's use a 100Km per day usage – that's ~62 miles – to receive a £4.15 saving on fuel. Imagine repeating this for 365 days a year which achieves a saving of £1514.75 over 22630 miles.

You can buy a new 1.6TDCi Ford Fiesta for £13500 on the road so it will take 8.9 years to recoup the extra cost of the Leaf, and that does not include the effect of inflation. I expect a calculation of discounted cash flow would be nearer 12 years although I've not actually done that calculation.

Now there are probably going to be other savings, for instance servicing might be lower with much fewer moving parts in the propulsion unit but it's difficult to see those savings making the purchase of the Leaf a feasible decision on fuel savings alone. Wear and tear on tyres and transmission etc will be the same.

However the one item that will need replacement at some time is the battery pack. Nissan guarantee the pack for 5 years in Europe, although I understand that it's 8 years in the USA for some bizarre reason. The cost of a new battery pack is estimated to be around £5-6000 which would immediately through the previous calculations out of the window.

Now – it might seem I'm picking on Nissan's Leaf particularly but the same arguments exist for other electric cars available at similar prices. I still believe that electric Cars are the future but we are not there yet.