Not so electrifying: private sales of electric cars are falling

Do you run an electric car? Quite a lot of us do, but the answer to ‘Do you own an electric car?’ is a rather different matter. At the top of the pile of subsidies these vehicles attract is the tax benefit of an electric company car. A top-of-the-range executive petrol-powered motor attracts a benefit-in-kind tax uplift of as much as £40,000 if your grateful company pays for everything. Switch to electric, and the bill falls to £320.

So it is hardly surprising that three-quarters of non-internal combustion cars are bought by companies. Many of the rest are acquired as virtue-signallers or second-car runabouts, especially in London, where the concessions of congestion and parking charges loom large. In other words, the numbers buying electric as their main car with their own money are a very small minority.

A recent poll for Which? found that fewer than half of 2000 respondents would consider buying electric, down from nearly two-thirds two years ago. Against this background, it is hardly surprising that private sales of these cars, far from the gently-rising graph that many have assumed, have stalled and gone into reverse. Second-hand prices have fallen by 25 per cent in the last year.

This is the background to Rishi Sunak’s decision to allow limited sales of new conventional cars beyond the previous 2030 deadline. The move also gets round the glaring defect in the old policy, of new cars being exported and immediately re-imported as effectively-new second hand vehicles.

The trouble is that we are suspicious of electric cars. Range anxiety is bad enough, but having to hang around at a motorway service station until a working charging point becomes available, and then waiting to recharge is not an obvious improvement in your standard of living. Both anxieties would get a lot worse in a hard winter when you need the heating on.

As time goes by, prices are likely to fall, thanks to be hundreds of millions taxpayers everywhere are pumping into car production. The real pricing pressure will come from Chinese imports, which will dramatically undercut the price of European models, thanks to their cheap energy, produced from burning coal.

The real total cost of the UK going electric has hardly been contemplated, far less admitted, by any government administration. The battery-heavy vehicles will increase road and tyre wear, while it is already clear that the transmission network to carry all this extra electricity will need tens, perhaps hundreds, of billions of investment to meet the demand, even assuming the wind farms work as well as their advocates claim. Then there is the small matter of replacing the £36bn a year currently raised from road tax and fuel duty.

The Prime Minster has merely taken a tiny step along what promises to be a rocky and expensive road. Either he or a Labour administration will be forced to go much further in spelling out the true cost of this great experiment.

A Long Time In Finance is also a weekly podcast, with Jonathan Ford and Neil Collins. On Spotify or Apple apps.