Is Buying a Plug-In Car a Good Decision?

Published on Tuesday, 12 October 2010 09:15

 

By R.G. Fernandez

Growing concern about vehicle pollution, which accounts for almost 20 per cent of the UK's greenhouse gases emissions, has lead car manufacturers to develop greener vehicles and the government to look into how to encourage consumers to adopt the new technology.

The UK Transport Secretary, Philip Hammond, announced that a 'Plug-In Car Grant' will go ahead on January 2011. The grant will offer a 25 per cent discount for anyone who purchases a plug-in car or hydrogen cell car between January 2011 and March 2012.

The argument for plug in and hydrogen fuel cell vehicles is simple. If one person switches to a green vehicle the change in global emissions is minimum. But, if billions switch to green transport, climate change should improve. So people are forced to ask themselves, "If I buy a plug-in car does the drought, the storms, and flooding end?"

Transport Secretary, Philip Hammond said the UK coalition government is "absolutely committed to low carbon growth, tackling climate change and making our energy supply more secure."

He said, "We are sending a clear signal that Britain is open for business and that we are committed to greening our economy."

Will business or the environment win out?

Antonio Graceffo is the former assistant head of private wealth management, for one of the largest private banks in the United States.

RGF: What are your thoughts on the plug-in car grants?

AG: I don't know enough about plug in cars, but this concept comes up every twenty years or so. It always fizzles because the cars need to be charged with electricity, and producing the electricity uses up resources and produces pollution, and the cost is off the charts.

RGF: Environmentalist and economists who praise hydroelectric cars say hydroelectric and hybrid cars could provide cheap transportation and bring the economic cohesion. Do you think lower and middle class individuals and those struggling with the economic crisis would be better off?

AG: I need to know how much the car costs, after the grant, because it may not help anyone if it is still expensive. Remember these people, all people, in America need cheap transportation, full stop."

RGF: Hydroelectric cars cost upwards of £30,000. Recent news reports suggest that although plug-in car grants have been trialed, the price of the hydroelectric and hybrid cars is still relatively high. Do you think electricity prices will rise if society switches to green vehicles?

AG: I am 43 years old, I have seen this come and go three times. It never happens. We will never switch. China won't switch, South-America, Africa, Cambodia, Sri Lanka, how can these poor people switch? If you want to help poor people with basic city transport, then look to the new tiny cars being developed in India. They retail for like 2,000 USD and are really small, so they are fuel efficient.

RGF: Could wind power provide the power needed to fuel electric cars?

AG: "There are only a few places in the world where it is viable to build windmills. In all but two or three places in America, from what I understand, the cost of building windmills far exceeds the power they generate."

RGF: Is switching to "green" is the only thing required as change, or is the regulatory system also in need of reform?

AG: If you forced everyone to go green tomorrow, you would force all of the lower class and most of the middle class into abject poverty."

RGF: But, is promoting green vehicles promoting change for lower and middle class people?

AG: Of course it won't help. They need a livable minimum wage and affordable housing and transportation.

The large costs of producing hydroelectric cars defines the end price. Hydroelectric vehicles will not sell for less than what they cost. Selling a product for less than what it is cost is called "loss lead product" sale, which is done to stimulate the market. Loss lead product sales are considered by most to be unethical and are illegal in some countries. Antonio Graceffo wrote about this in his article, Tomorrow's Spending Today, More on the Global Financial Crisis.

'When I was a student in Germany, I discovered that Germany had very strict rules against sales. And loss eaders were actually illegal. You couldn't sell a product below cost. The German rational was that by selling low cost products, large stores had an advantage over small stores and this was in detrimental to a free market.'

Will grants stimulate the market?

Why are the UK government giving grants? Some say it is to fuel the international image of, "open for business, low carbon".

Others say it is, "to stimulate the technology that should bring down levels of pollution".

When it comes to cars, other issues other than cost also have to be considered. It is one thing is to buy an eco-green bag, instead of a plastic bag, but making the move to a greener vehicle is a more difficult decision.

Security, performance and maintenance are of great importance. After one hundred years of petrol-powered cars it is difficult to imagine how consumers, garages and breakdown assistance companies will react to faults in the new vehicles.

How is an electric vehicle maintained and will a specialist be required to fix the cars? With recent news of electrical failure causing vehicle recalls it is only fair to ask, how does this news influence the market? Are new hydroelectric cars safe? How plug-in cars perform in sales through 2011 to 2012 could define the market of plug-in cars, the tax, the grants, the costs and future plug-in vehicles. The bottom line is who will benefit from plug-in grants?

Related Links

What Green Car? Plug-in car grant article

Department of Transport news

Plug-in car grant criteria

How does the government support green cars? (Video)

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