It has been announced that the UK government's much vaulted £5,000 subsidy towards the purchase of alternative energy cars (worth £43m in all by OLEV) will stay in place. This is an unexpected outcome given the size and speed of national and regional budget cuts that Chancellor Osborne rightly states must be implemented in the short and mid term.
But should it be unexpected given the political and budgetary realities of the situation?
Could the announcement, no matter how well intentioned, infact represent a reality where the monies apparently made available are hard to access in practice due to (in)inadvertently constrained terms and conditions of the scheme and the realities of the EV and ULEV marketplace?
Could its true purpose instead be a much needed 'rally-cry' to foreign manufacturers of advanced powertrain systems that to quote Transport Secretary Richard Hammond, “the UK is open for business”. This in itself should be applauded, yet the consumer realities and so immediate carbon-footprint reduction impact, of the scheme may be less so.
Given the unpopularity generated by the deep budget cuts needed to reduce the nation's debt levels, investment-auto-motives (itself a naysayer of current EV capabilities and business models) believes that the exercise to 'greenify' London and the country, no matter how well intentioned today, may contribute little.
As read in financial and trade press, the retained grant offers £5,000 toward 25% of the cost of a new vehicle which has either Fuel-Cell, Full Electric or Plug-In Hybrid powertrains, which comply with safety, reliability, performance and warranty standards set by the Office for Low Emission Vehicles.
That may appear poignant and indeed generous, but look to see exactly what cars are available and the offer starts to lose traction.
To start – in reverse order - there are no Fuel-Cell vehicles currently in production besides limited series buses and trucks, with only prototype fuel-cell cars being evaluated by the R&D departments of global manufacturers such as most notably Honda, and in addition small often VC backed start-ups. [NB. the latter demonstrating mis-allocation of private capital for anything but military vehicles].
The EV has of course made an impact in London to a smaller extent other UK metropolises. Most visiblee in the ground-breaking yet oft mocked 'Noddy-esque' Reva G-Wiz purchased by high-profile (typically 'City' & Media) execs seeking green credentials; yet the car's sales havewanedd as its product life-cycle peaked and recession appeared.
A new model has been created and Reva apparently seeks factory/assembly space outside of its homeland India. [NB this topic may be on PM Cameron's agenda during his current international-trade agenda - beyond the prominent nuclear talks]. Yet immediate promise for Reva looks doubtful given that it has only reportedly sold 3,000 cars over the years (up to Jan) 2010, and its updated re-style whilst looking better, is largely a re-skin of a very basic, less than truly crash-worthy structure.
Effectively replacing the G-Wiz has been France's Axiam-Mega EV, derived from the Country's popular quadricycle sector which typically uses small capacity ICE. More conventional in stature and looks, the car is more 'grown-up' and has the backing of a large industrial corporate, having acquired the assets of the flailed NICE (No Internal Combustion Engine) Co based in West London.
Other 'commute' and 'city-delivery' vehicles are available from Chinese sourced MyCar, Ze-O.
Adapted conventional cars include Daimler's >smart. BMW's Mini, FIAT's e500, PSA's C1 & 107 and Mitsubishi's i-MiEV (also badged by PSA), but these are available only as limited series 'test-bed' fleet, much of which has been deployed.
[NB. investment-auto-motives believes that beyond the ground gained by Daimler's local use >smart EV, the only truly convincing EV (& ULEV) project to potentially satisfy all of the required economic, technical, legal and consumer demand parameters is the BMW MegaCity programme. This seats 3 or 4 instead of 2 and scale-up & cost-down robust lightweight carbon-fibre structures which can be 'dressed' on standard production lines, so heavily reducing the need for costly EU labour and maintaining product quality].
So regards pure EVs, presently little beyond the Axiam Mega which effectively replaced Reva, is presently even approaching convincing, though highly priced for its capabilities, whilst the adapted mainstream models if even available are extremely expensive (eg i-MiEV at £25k).
[NB Axiam Mega has entered the UK to essentially grow its ICE business as a new era parallel to Reliant Motors (4 wheeled Kitten) of old]. But the numbers of EVs sold will in actuality remain intrinsically limited and low.
The big EV story (literally) is of course the much publicised Nissan Leaf sedan, which packages all necessary electrical systems into a compact saloon format, and critically for the UK includes Sunderland assembly.[NB investment-auto-motives expects this in reality to be a 'halo' variant model with ICE also]. But that is not expected for launch until 2013, when in the midst of an expectantly improved UK economy, the present subsidy (or its size) will probably be long gone, depending on the results of the first review due in Jan 2012, short months ahead of the Olympics.
Plug-In Hybrid is now available as a development of 'standard' hybrid technology, notably from Toyota and the 'ever-green' Prius (in its ZVW30 guise).
At the end of the day of course, to access the grant funds depends on actually fulfilling the prescribed remit of product capability and importantly meeting the criteria that on the surface states “25% of the vehicle price, up to £5,000”. This appears to be key, and as ever, much is in the exact wording of the offer – especially so the inter-dependence of X% and £X - and its relativity to real-world circumstances.
This would suggest that such an eligible car would cost £20,000, but the smaller cars from India, France and China do not appear to meet the prescribed benchmark product standards, whilst the larger EV cars from global manufacturers made available have either been already acquired (on a monitoring basis) and cost well above the £20,000 apparent set limit. [NB the Nissan Leaf is expected at £28,350 before incentive subsidy and so £23,350 if applied].
Of the Plug-In hybrids, Honda is not set to launch a PHEV until mid 2012 and then only in Japan & US, thus practically irrelevant given geographic availability and chronologically beset given the Jan 2012 grant review point.
General Motors still highlights the benefits of Chevrolet Volt/Opel Ampera given its 'range-extender' (ie ICE back-up) package which supposedly offers 350 miles of travel. Yet it is being touted at $41,000, well out of the ball-park for the majority of compact sedan buyers, and probably the majority of which will go to car rental companies; to acclimatise the public and generate production efficiencies - as seen with Nissan's Leaf.
This then leaves Toyota's Plug-In Prius as the only real beneficiary of the £43m grant scheme, given its expected launch soon. The car uses L-ion battery technology instead of the more convention Ni-MH in the standard (non-plug) car, and will represent an important volume scale-up of the L-ion application which should reduced what are presently wide cost differentials between the lower cost Ni-MH and more expensive L-ion. However, given that only the less popular base variant of the Prius (the T3) costs beats the theoretically nominal £20,000 limit (by only £145) versus £21,510 T4 variant and £22,960 Sprint variant, the expected take up would be less than immediately imagined for all Prius sales.
Thus, it seems that the “eco-car grant” has been viewed through the 'political telescope', and the resultant perspective demonstrates that the relatively low cost of the big PR exercise would, if extinguished, would contribute little to the nation's budget deficit reduction efforts.
Instead, from first impressions, it seems to offer a greater 'bang for the buck' for governmental PR, than for eco-conscious consumers given the possible 'invisible devil in the detail'.
If the UK's new car buyers wish to 'save the world' they could well end up having to pay a higher price than initially expected to do so.
However, even if not of immediate 'greening' impact given their small scale, positively, the very existence of alternative energy vehicles means a continued pressure on ICE, conventional hybrid, power systems and body structure technology advancement...to deliver better carbon-footprints and so lower oil consumption at more realistically amenable market pricing.
The 'eco-grant' may prove hollow when properly examined, and indeed could be viewed as international trade & FDI prompters with Japanese and French trade partners, but they at least highlight the UK's desire to improve the sustainable mobility model and both welcome-in and push-out across the board technological advances that act as economic generators in their own right.
And of course, if that £43m cannot be practically spent, it will add a small chunk to the deficit reduction process.
Congestion charges may have been added to Parking Meter charges, and the 'Lovely Rita Meter Maid' may be not so well loved today, but both in Park Lane or Penny Lane, the Conservative-Lib Dem coalition will be watching the proverbial pennies so that the pounds can look after themselves – much to the pleasure of City and IMF international bankers.
The song 'Penny Lane' mentions the “banker with his motor car”, and the fact that “he never wears a mac in the pouring rain...very strange'. Well “the banker waited for his trim” and will receive it judging by the slimmed Q2 2010 bonus pot.
That will be the reality for public spending too, even if presently over-dressed in 'electric blue'.