The UK is not Investing Enough in Electric Cars

Think electric cars charging in Ærøskøbing
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In 1912, Thomas Edison’s invention, the nickel-iron storage battery, was used in one of the first electric cars. Almost one hundred years later, there are relatively few electric cars on the world’s roads. There are, of course, many reasons for this. However, it is worth asking: could many of these reasons be overcome with proper investment?

Well, many people believe that the answer is “yes”. In February, 2011, Shai Agassi, head of Californian-based transport firm Better Place, stated that the UK simply is not doing enough to promote and develop the use of electric cars. He claims that the current grants offered by the UK government are not substantial enough to inspire confidence in consumers or, crucially, investors.

Agassi, who is looking to take his pioneering company to the UK, is dissatisfied with the current investment. He feels that the current government policy is too small and not far-sighted enough to meet future expectations.

This will no doubt come as a blow to the UK government, which wishes to have 1.7 million electric cars in use by 2020. This figure is necessary for the country to fulfill its legal obligation to meet carbon reduction targets. However, Agassi feels that this can not be achieved if the current policy remains unchanged.

The UK government recently launched a scheme that subsidizes the purchase of an electric car by £5,000 (approximately $8,100). This incentive scheme was put in place due to the expense of electric cars, which are currently around 1/3 more costly than the average combustion engine vehicle. However, with a review scheduled in 2012, it could be that the scheme only survives for one year, placing only an estimated 8,600 electric cars on the road.

One of Shai Agassi’s main problems with the current UK plan is this lack of clarity about the length of time the scheme will run, he claims that “Investors want to see clarity on the regulatory framework that would indicate that the government would support this for a long period of time, not just for a small number of cars or a short period of time.”

More worryingly for the UK government is that it seems to be falling behind the rest of the world. Agassi points out that many European countries are doing more to provide their citizens with incentives. For example, Denmark has a 180% tax on combustion engine vehicles and a 0% tax on zero emission cars. Likewise, France has a €5,000 subsidy on the purchase of electric cars.

Similarly, the US and Japan offer substantial subsidies on electrical vehicle purchases. Agassi claims that in all of these countries, the incentive schemes ensure that electric vehicles take the place of hundreds of thousands of combustion engine cars.

One thing is for certain, if the UK hopes to reach its target of 1.7 million electric cars by 2020, it is going to have to do something drastically different. With only nine years to reach this ambitious target, current policy is simply not working and withdrawing a short-lived subsidy is perhaps not the best solution. We have been left much more than just Thomas Edison’s light bulb and we should be taking advantage of his legacy.

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