Soaring energy costs could threaten future of electric cars, experts warn
Industry bosses in Germany say high costs are having an impact on vehicle production and sales
Soaring energy costs are threatening the future of the electric car, industry bosses in Germany have warned.
A rise in electricity prices as well as in raw material costs and availability, a chronic shortage of parts, and a widespread reduction in disposable income are having a considerable impact on the production and sales of cars.
If the trend continues, there is also concern that there will be a knock-on effect on investors who will lack incentives to build charging facilities, making electric cars less attractive – because they would be more impractical – to run.
Until recently ownership of electric cars had been gaining in attractiveness as the cost of petrol rose. But since recent rises in electricity prices – in Germany of around a third compared with a year ago – the price differential has shrunk.
Electric car owners, whether charging their cars at home or through contracts with charging operators, have seen price rises of 10% or more. Further price rises are expected, owing to the fact that the price of electricity is linked to that of gas, which has become ever scarcer since Russia turned off its gas supplies to Germany almost two weeks ago.
Allego, one of Germany’s largest charging station operators, raised its prices at the start of this month from 43 cents a kilowatt hour to 47 cents. Express charging, via a continuous current, has risen from 65 to 70 cents a kilowatt hour while the fastest, so-called ultra-fast charging, has gone up from 68 cents to 75 cents a kilowatt hour.
Discount supermarkets, DIY chains and furniture stores which had until recently offered customers free charging while they shopped are now introducing charges.
According to the automobile economist Stefan Bratzel, the development is an immediate threat to the industry.
“The electricity price explosion could end up being an acute danger for vehicle transition, and we need to be damn careful about it,” he told German media.
“If electric cars become more expensive to use, the surge in electric mobility is in danger of collapsing, because hardly anyone is going to buy an electric car,” Bratzel, who is also founder of the Center for Automotive Management (CAM), said. He and other electric car advocates are now calling on the German government to ensure that the electricity price remains under the price of petrol, which they say is crucial to the future of electric cars.
“Electric cars are losing their charm,” Helena Wisbert, director of the Duisburg-based Center for Automotive Research, wrote in a recent commentary for the economic daily Handelsblatt.
State subsidies of electric cars are set to halve to €4,500 (£3,900) from 2023, while buyers of plug-in hybrids, who currently receive a €6,750 payment towards them, will no longer be supported. The overall pot of money available is to be capped at €2.5bn, enough to cover bonuses for just 400,000 electric cars – less than 1% of the cars on German roads.
Industry observers say they do not believe an EU reform that is on the cards which would decouple the price of electricity from that of gas will happen fast enough.
“The boost to the market needs to function, and now, that is absolutely central,” Bratzel of CAM, said.
One suggestion that could be relatively swiftly implemented would be to increase the vehicle tax on diesel and petrol cars. Currently electric cars are not eligible for vehicle tax. They are also able to use bus lanes and parking places unavailable to non-electric cars.
In Norway, where the government was an early adopter of financially incentivising electric car purchases and putting in place a widespread charging network, 64.5% of new cars registered last year were electric vehicles, putting it at the top of a list compiled by the Association of European Automobile Manufacturers.
Germany is in sixth place on the list, with 13.6%, and the UK in ninth, with 11.6%.