Is the hype around electric vehicles justified?

Gail CounihanIn order to muscle conventional vehicles off the road and become the dominant technology, electric vehicles need to be able to hold their own in three important ways: performance, practicality and affordability. Gail Counihan, Responsible Investment Analyst at Royal London Asset Management, takes a closer look at these three areas.

Read the article here

Past performance is not a guide to future performance. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.

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  1. In answer to the question – no of course not.

    From so many angles these ‘milk floats’ seem to appeal to a minority. I apologise in advance if the post goes on a bit, but this is a major hobby horse of mine.
    All this publicity concerning these pseudo vehicles just doesn’t reflect the reality. What is more popular F1 or Formula E? How come the UK is the biggest market for souped up vehicles. (M series BMWs; S and SR Audis, AMG Mercedes, Abarth Fiats etc?) In 2018 there were 2.37 million cars sold in the UK of which 59,250 were AV (electric, hybrid etc) – about 2.5 % if the total. Insignificant. The vaunted performance is a chimera. The more you drive with gusto the shorter the range. And whatever you do, don’t have the heater, the heated seats, the windscreen wipers, the radio, the headlamps and the sat nav all turned on – you are unlikely to make it to the shops. Fast charging? How fast is fast? An hour? How long does it take to fill up your car? 15 minutes? Of course the lack of chargers is an issue if you are going to travel no further than round the block. Then of course if we all had electric cars (or most of us did) our grid won’t be able to cope, even worse if the wind doesn’t blow! Our much needed Nuclear power is years away.

    The ecology card has been overplayed Gail Counihan rightly points out that currently the savings on fossil fuels engendered by AVs is non-existent. How many AVs will we need to make a significant dent? How likely will that be in the next 25/30 years? Again on an ecology basis AVs are not all what they seem. Lithium has to be imported. The weight of vehicles is heavier and there is pollution from tyre degradation Batteries have a life of perhaps 5 years and are very expensive to replace. Many London Busses and Taxis have Teen running (with routine maintenance) for 20 years.

    The tax advantages currently applying to EVs are being reduced and will probably ultimately be withdrawn and also likely is the withdrawal of exemption from the congestion charge. Factors not exactly designed to encourage AVs.

    Take Tesla: Tesla has a debt mountain. From a financial performance perspective it looks unsustainable. Perhaps that’s why the Chief Accounting Officer has left. (Not to mention the chief HR Officer. Indeed 41 executives have left the company in 2018. That alone doesn’t auger well). One may wonder how much longer creditors will remain patient?

    The Model 3 may well have been the largest single revenue generating car in August 2018, but each still loses money. And that’s on a base price of £30k. That rather puts it into the premium market. Remember that you can buy a Dacia Duster for a third of that price.

    Autonomous vehicles are all scheduled to be electric as is most of our public transport. This too is cloud cuckoo land. These AVs won’t be much use if you want to travel; from London to Glasgow. If you live in an outlying suburb, how long will you have to wait for one to pick you up to go into town? Having AVs in a hub to take passengers to their home looks like an idea, but how much will the fare cost? I leave my car at or near the Tube station.

    Public transport. If there is a significant move to autonomy do you think the unions will sit still? There was enough trouble when the trains wanted to do away with guards.

    AVs will most likely have to have the roads to themselves as mixing them with driven cars looks like asking for trouble. What fun it will be cutting up an AV to see how it reacts!

    Of course the moot point is – will they ever be perfected? I guess modern science will succeed in the end, but at present they still have problems identifying hazards and the speed at which they proceed (in order to handle the unexpected) makes a snail look swift.
    Then we have the moral and ethical considerations (apart from the decimation of professional drivers.) Insurance. If there is an accident, who is the insured? The owner of the AV? The passenger or (if there is one) the supervisor?

    Then there is the discounted minority. Those who enjoy driving. (How big this minority is has yet to be established). Then there are other factors militating against people giving up their own cars. There is still a love affair with the car. There is also the status effect – why buy a BMW when you can get a Dacia? Pride of ownership. What else are you going to do if you can’t wash the car on Sunday?

    The quest for greater safety is laudable. But there is a much easier and far cheaper path to this nirvana. As I’m sure most readers of this journal will agree, the average standard of driving is pretty lamentable. So why not make the Driving test a lot more rigorous – dare I say – along the lines of the Advanced test, together with a proper language test for spoken, reading and writing. That may possible reap as much benefit as all this money being spent on AVs.

    So for those who have had the patience to get this far, I hope I have demonstrated that the hype is very far ahead of reality. I guess in a hundred years’ time this may look a quaint view as all vehicles will be the boring silent types. Those of us who enjoy the roar of a V8 will long since have taken our place in the knackers yard. But while there are petrol heads and Clarkson fans around there will be internal combustion engines.

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