Norway has had incredibly generous electric car subsidies. This has meant that the number of people changing to electric cars are so high that the tax from gas guzzlers is falling faster than they anticipated. Electric cars are already 77.5% of new cars sold. This compares to the UK at 15% of new cars being electric, and the USA 2.6%. I find the USA particularly strange as they are the country which has lead to the rise of Tesla- though admittedly given the rise speed that tesla has been growing, this is probably out of date. With tesla, if the numbers are just 3 years out of date the number of deliveries has trebled (if you look back to 2013, only 8 years, there is only 20,000 sales, yet in 2021 936,000 were sold 4700% growth in 8 years).
The take up has been incredibly fast. There have been some wobbles in the UK when they have (as Norway is doing) questioned how they would raise the same tax using electric and suggested that we should just have some sort of by mile tax to make up for the loss of the petrol and diesel tax. Quite rightly this put people off – if we needed to raise the same amount of money for tax as for a combustion engine car, we would have to pay around 10p per mile to the government (which would mean that for each charge of your car, costing around £3 you would then owe the government £30).
The loss of combustion engine cars has blown a hole in Norways budget of roughly $2.62 billion, or roughly 1% of the countries spending.
One of the big problems which countries all over the world are going to have, is that there is a reason for taxing combustion engine cars – they emit gases bad for humans and the planet. Once we have switched to electric, what is the governments argument for taxing so heavily? In a country like the UK there is also a question, in 2019, the British government took tax from combustion engine fuel sales amounting to 37 billion pounds, or roughly £550 for every man woman and child. The simple fact is that as electric cars are so much more efficient less energy carries you further.
Given the rapid rise of the electric car, countries are going to have to find ways of balancing the budget – and fast. However, given the UK has said that no combustion engine cars should be sold after 2030 we have a long way to go. At the current time, roughly 1 million cars in the UK are partly electric. However, half of these are PHEVs which are a foolish mid step – they are more complicated, needing a full combustion engine and electric one, they are rarely given a battery big enough to drive only in electric except around town. Indeed it has been shown that PHEVs are driven in electric mode for less than 10% of the time on average.
These sorts of questions are going to be raised with increasing regularity, as more and more countries start to move into a similar place to Norway. I suspect for the UK we will be at least 15 years behind. It is true that many people are looking at electric cars for their next car, but a not insignificant proportion are determined to buy one more ‘normal car’ first. At the moment, my family does not have enough money to buy an electric car. However, we have worked out, that after you take away the cost of fuel, and the increased cost of maintenance (on a combustion engine car), you can get quite a fancy car for only a few hundred more per month than the petrol car cost – we are looking seriously, at leasing an electric car from later this year.
Perhaps if COVID ever ends and this site becomes useful for travel we will be able to buy our own, still that’s in the future.
What is clear, is that if you are looking at buying a brand new car and you have the money to do that now, you should be looking electric. Teslas are similar prices to cars from a similar market segment (tesla 3 starting at £42k compares to perhaps BMW 3 series starting at £30 but with savings the tesla can easily be cheaper).