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Economy is the key

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Posted January 5, 2016

The fact that electric cars have not yet experienced the breakthrough in Denmark which the manufacturers had hoped for is down to purely financial considerations. This is the conclusion of several research projects at DTU Transport.

“The studies show that people do not allow their joy of doing something positive for the environment to overshadow economy. Only when the price gap between a conventional car and an electric car is minimal, does environmental performance come into the picture,” says Associate Professor Stefan Lindhard Mabit, DTU Transport.

Among other things, he points to a PhD project by Anders Fjendbo Jensen, DTU Transport. The study maps the changes in the market for conventional cars from 2007 and onwards.

“A mix of technological advances and changes in taxation have made it attractive to buy small petrol or diesel cars with good fuel economy. Neither tax exemption for the purchase of electric vehicles nor the possibilities of free parking has been able to cancel out the effect of the difference in price,” says Stefan Lindhard Mabit.

Leasing as weapon against uncertainty

“Norway has chosen a different tax structure, where the price difference is far smaller between small conventional cars and electric vehicles. Here, the sale of electric cars has gone much faster,” continues Stefan. He adds that, in addition to the current Danish price difference, there is the uncertainty about future development:

“It’s difficult to predict the price of a used electric car, and it’s uncertain what will happen politically vis-a-vis the phasing-out of tax relief and the possibility of free parking.” An uncertainty which the manufacturer, Clever, has addressed by leasing—as opposed to selling—electric cars to its customers.

There is certainly a market for leasing electric cars, but some conditions have already changed since 2013—when the data material in Anders Fjendbo Jensen’s PhD project was collated:

“According to the study, there is another factor—in addition to the price—which also has a decisive impact on whether or not people want to buy an electric—namely the mileage range. However, a lot has happened in this respect since 2013. The network of charging stations has been expanded and the batteries have been improved so that motorists can drive further on each charge. Therefore, I believe that a new survey will give a different result where this is concerned. In contrast, the price gap still exists.”

Taxes are of great significance

Another study with the participation of DTU Transport has compared attitudes to electric cars in different EU countries. The study, which is financed by the EU, could have pinpointed more emotional or cultural differences in consumer preferences.

“But despite differences in attitude and culture, the two crucial factors were first and foremost price and then the range of electric cars,” says Associate Professor Stefan Lindhard Mabit.

DTU Transport is continuing its research through—among other things—a project funded by Energinet.dk. The project uses simulators, where test subjects respond to variations in the price of electricity. The purpose is to clarify the degree of impact electricity prices will have on the decision to drive electric cars. The researchers also want to know how much of a price difference it will take to move power consumption to times of the day when there is an abundance of electricity—e.g. from wind turbines.

The experiments have only just begun, but based on earlier studies it is reasonable to assume that consumer behaviour to a large extent will be controlled by the differences in price, concludes Stefan:
“For example, we can safely say that if the tax exemption for electric vehicles is removed without registration tax taking into account that electric vehicles have better fuel efficiency—as is currently being discussed at political level—it will significantly delay the advent of electric cars.”

Source: DTU

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