What your electric vehicle costs me

In order to encourage uptake of electric vehicles, owners enjoy privileges not enjoyed by ordinary motorists; reduced licence fees; exemption from mooted congestion charges; use of bus lanes and priority lanes etc.

And driving in a cloud of smug.

As the number of electric vehicles increases, these concessions will become unsustainable, and the smug will fade. ?What this post considers is the effect on the government?s revenue of foregone petrol taxation. A second post will look at ways and means to recover this lost revenue.

Fortunately, Whaleoil has access to clever people who can think about these things and work out complex formulae and so ToBoldLeeGoh?got out his calculator and ran the numbers. ?It is an exercise that we highly recommend James Shaw and Megan Woods should try sometime.

Petrol has a calorific value of 32.8MJ per litre, equivalent to just over 9kWh (1kWh = 3.6MJ). However the efficiency of the petrol vehicle is between 20 and 25% under normal driving conditions; that is, the percentage of contained energy actually converted to on the road propulsion energy. So, in round figures, we can take a litre of petrol as being equivalent to 2 kWh of useful energy. ??That means that the energy delivered to the road from one litre of petrol is equivalent to running your two-bar heater for one hour.

Electric vehicles are much more energy-efficient, but they are not perfect; one cannot replace a litre of petrol with 2kWh. Comparing the case of a medium-size petrol sedan consuming 8 litres (73kWh)/100km and a Nissan Leaf with a (combined EPA equivalent) ?consumption of 18.7kWh/100km, a reasonable estimate, taking into account inefficiencies of the charging and discharge cycle, losses in the converter, the efficiency of the electric drive motor and the energy equivalent of additional weight, would be that 2.5 kWh of electrical charge energy is required to replace one litre of petrol.

[Wikipedia has a handy table of Electric car energy efficiency which compares official ratings for fuel economy (miles per gallon gasoline equivalent in the case of plug-in electric vehicles) for series production all-electric passenger vehicles rated by the EPA as of ?November 2016, versus EPA rated most fuel-efficient plug-in hybrid with long distance range (Chevrolet Volt ? second generation), gasoline-electric hybrid car (Toyota Prius Eco – fourth generation), and EPA’s average new 2016 vehicle, which has a fuel economy of 25 mpg?US (9.4 L/100 km; 30 mpg?imp).]

The AA tells us that for every litre of petrol purchased, 69.984 cents is collected by the Government as fuel excise, excluding GST. (77c including GST)

Since a litre of petrol is currently taxed at an average of 70c (80c in Auckland), it follows that for each kilowatt-hour of electric vehicle energy used, four-tenths of this tax revenue ie 28c (32c in Auckland) is foregone. As the market penetration of electric vehicles increases, the amount of revenue flowing into the government coffers diminishes significantly.

How much is this revenue? According to MBIE figures for 2017, 2.4 million tons of petrol were consumed for domestic transport ? the density of petrol is 0.75kg/l so that?s 3.2 billion litres. At 70c/litre that?s $2.23bn ? or about 2% of total tax revenues.

Of course, this revenue isn?t going to disappear overnight, but it?s a significant amount to lose without having a replacement strategy.

How much do you want to subsidise your neighbour’s smug?”

(Many thanks to ToBoldLeeGoh for all his hard work on this post. I had the easy ride.)

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