Reasons for Reluctance on Hybrids

hybridcarsign
hybridcarsign

As more and more vehicles with alternative fuel sources become more available, the greater the opportunity for the environment to recover from the long standing effects of pollution. The choice of purchasing a hybrid vehicle has become synonymous with responsible for one’s environmental footprint on Earth.

Hybrids are gaining ground, as more coverage and purchases has increased its popularity in recent times. It is for this reason that some hybrid models released in 2011, such as the Nissan Leaf, had been sold out even before they become commercially available. The increase in their popularity has made vehicles of this platform become commonplace on many roadways.

There are many reasons why many are still reluctant as to purchasing and investing in a hybrid vehicle. The following are the most common excuses why individuals still do not want to go green, so to speak.

  1. Bullied into Environmentalism. Everyone seems to be going environmental in some part of their life and even in mass media. There is no hard sell acceptance on this, as one can join the green movement incrementally. One step in this going green is purchasing a hybrid vehicle, a small step with a great effect. This transport platform produce lower amounts of carbon emissions, thus your share in the green revolution.
  2. Sentimental Value. Many refuse to let go of their gas guzzlers because of the memories made with the car. Others find the design of the new generation vehicles too futuristic for comfort. Do remember that one can create new memories and have a new relationship with your hybrid vehicle. Also, the designs have become nearer to current conventional designs leaving many to be befuddled as to what lies under the hood for many hybrid vehicles.
  3. Fear of Being Stuck. This is one of the greatest issues when it comes to alternative fuel vehicles such as hybrids. Aside from improving the vehicle technology, many companies are scrambling to provide support services. Furthermore, having a dual engine set up allows for both gasoline and electricity to power the vehicle, extending the range and ability to complete the journey. Thus, being stuck only happens if you lose all power sources and your car’s ability to decide on the engine to use.
  4. Using a Hybrid has little effect. It has been found that nearly seventy percent of all oil consumed is used for transportation. Compared to the number of internal combustion engine cars, there is a staggering difference in population numbers. While it may seem that it is small, the daily savings on oil would eventually add up leading to greater environmental advantage in the long run.
  5. Too Expensive. Many think that hybrids are too expensive. Many fail to realize that this is a front loaded expense that can eventually be recouped with the use and efficient consumption of the vehicle. The initial payment, together with the existing federal tax credits would eventually be recovered in a short time compared to the continued increasing cost of fuel at the gas pump.

These are the common excuses why people refuse to change their lives for the better. Flimsy as they are, these are the justifications to why hybrids are better choices for you and the future.

Are the Oil Rich Countries of the World Secretly Backing Electric Vehicles?

Even though it would be wrong to suggest that the supply of oil around the world is currently at dangerously low levels, there is no doubt that eventually (some predict over the next 50 years) we will see oil supplies around the world fall substantially and a growing need to depend more upon alternative energy sources. As a consequence of this particular development the electric car market is certain to become more popular around the world with many believing that ultimately the electric car market, and other eco-friendly powered vehicles, will smash the monopoly currently held by the petrol/gasoline market. In readiness for this eventual occurrence it seems as though some of the oil rich countries of the world are now looking to invest into the electric car market as a future hedge.

So what exactly is going on?

While the name Tesla Motors continues to grab many of the headlines in the electric car market it is a little-known fact that back in 2009 luxury car manufacturer Daimler acquired a 10% stake in the business. The two car companies have been working together on technology for the future and there are plans for the introduction of Daimler electric Smart cars in the short to medium term. However, it looks as though Tesla Motors has attracted the interest of Middle Eastern investors who are interested in becoming involved in the operation.

Aabar Investments has been confirmed as the buyer of a 4% stake in Tesla Motors from Daimler. This sale of part of Daimler's stake in Tesla appears in some way to be connected with Aabar Investments $2.7 billion investment in Daimler which resulted in the company taking a 9.1% stake. The two largest shareholders in Daimler are now Middle East-based and with the largest stakeholder in Aabar Investments reported to be the International Petroleum Investment Company we are starting to see the emergence of a shift of power.

How will this work in the future?

Even though Daimler is central to this story there is no doubt that Tesla Motors is the jewel in the crown of the electric car market. However, it is not yet clear how the Middle Eastern investors would look to participate in the future of Tesla Motors and indeed whether there is a potential conflict of interest.

The situation could go one of two ways, either the new investors into Tesla and Daimler could use these companies as a means to expand their own investment into the electric car market or they could in some way attempt to stifle the development of vital technology in the sector. While sceptics will suggest that they will look to delay the introduction of electric cars as late as possible these two investment companies have a history of investing for profit and investing for the future.

Funding for the electric car market

While the emergence of such well-known names behind Tesla Motors is very welcome to see, together with potential access to significant investment funds, the company appears to be fully funded at the moment after receiving a $465 million low-interest loan from the US government's Energy Department. Even though ultimately the funding will be used to expand operations in the US, thereby introducing significant job prospects, it should also allow the company to push ahead and drag the rest of the electric car market forward.

It is also worth noting that while Tesla Motors grabbed the headlines with regards to its low-interest loan from the US government there were further investments made with Ford Motor receiving $5.9 billion and Nissan North America a further $1.6 billion to develop and market their own brand of electric vehicles.

Could the United Arab Emirates be the next big electric car market?

The two invest companies which have stakes in Daimler, with Aabar Investments also obtaining a direct stake in Tesla Motors, have strong connections with the United Arab Emirates. This particular part of the world depends heavily upon oiling income and for some time the leading authorities have been looking at ways to diversify away from this dependency in the future. There is a growing feeling that the United Arab Emirates is looking to push itself forward as an eco-friendly electric car friendly market which could in due course attract significant investment.

When you consider that Tesla has only been around for a few years the chance to crack the Middle East market appears to be on the horizon, something which could ultimately transform the company.

Could the electric car still be mothballed?

While there is a suggestion that some of these oil based investment companies could look to delay or ultimately mothball any developments in electric car technology, many people believe the sector has moved too far out of the shadows to return again. It would seem more sensible from a financial viewpoint, as well as a business viewpoint, to push the likes of Tesla Motors and enjoy the fruits of success which look likely to follow.

Even though there will always be scepticism regarding the electric car market it does appear at this moment in time that developments and investment by governments around the world have gone too far for the sector to disappear without trace again. Many believe that the matter came to a head over the last 12 months with the rising price of oil which ultimately impacted upon the worldwide economy and highlighted the global dependence on the black gold.

Conclusion

While the Aabar Investments, Daimler and Tesla Motors triangle offers the potential to build on the excellent start made by Tesla Motors, do not expect this to be the last significant investment in the sector. Even though Tesla is currently leading the way there are many other start-up companies making good progress and attracting the interest of significant investors.

How ironic that it could turn out to be oil money which brings the electric car market to life and ultimately opens up the sector to the mass market. The signs are there, even though there is much work to be done, and many people seem to be in something of a rush to make use of the move towards eco-friendly products and eco-friendly vehicles, before a new trend comes along!

Why is the Idea of Electric Cars so Taxing?

Why is the idea of electric cars so taxing?
Why is the idea of electric cars so taxing?

As we covered in one of our earlier posts the idea for electric vehicles has been around for nearly 100 years although there has been limited progress prior to the last decade. When you consider that the more traditional petrol and diesel powered vehicles cause harm to the environment, use up vital natural resources, can be expensive to maintain and are dominated by the cost of oil, surely there must be a reason why electric cars have not taken off? There are many conspiracy theories and ideas as to why the electric car market has yet to take off, all of which ultimately boil down to money and government budgets. So why exactly have electric cars failed to take off as yet?

Government budgets

When you consider that the UK government, as an example, earns billions upon billions of pounds a year in taxation on petrol and diesel it is not difficult to see why there has been some apparent unease at the introduction of electric cars. Literally overnight governments around the world could see billions upon billions of pounds wiped off their annual budgets forcing them to find new ways to tax the public and businesses to make up for potential shortfalls.

Tax on petrol and diesel

The beauty about the tax the government introduced on petrol and diesel in the UK is the fact that it is a percentage of the overall cost of fuel rather than a set figure. This has proven to be a very lucrative strategy for the UK government in particular, which has one of the highest percentage tax rates on fuel in the world, with the price of oil powering over $100 a barrel just a few months ago.

Despite numerous complaints and demonstrations from the UK public and those in the UK business arena, the UK government has been unwilling to give back any significant tax income gained from this particular source. So how will the authorities tax electric power for your electric car?

Tax on your electric car

While obviously there is a VAT element to be paid on any vehicle you acquire, governments around the world have been pushed into a corner by the "green movement" and forced to give away significant tax rebates to those acquiring more environmentally friendly cars. However, at this moment in time the overall loss of tax income is relatively small when you consider the number of electric vehicles in mass production, although it is sure to increase over time.

As a consequence we are unlikely to see any significant long-term tax incentives to go "green" with regards to your choice of vehicle. This is likely to be slowly phased out by the UK authorities who will not wish to attract attention to the matter.

Taxing your electric power

The fact that many drivers will be recharging their electric vehicles in the future, using their home power supply, is something which the UK government will need to address in order to maintain an ongoing increase in taxation income. Even though the authorities recently introduced VAT on utility bills such as gas, electric and water there will need to be a total revamp of the electric car taxation system as and when it becomes mainstream.

The very fact that electric cars are significantly more economical than your traditional petrol and diesel vehicles will ultimately lead to a reduction in fuel related tax income. Whether we see the introduction of electric car only power points around the country, such as garages and supermarkets for example, where the tax take on the "fuel supply" will be significantly higher than your traditional electric supply remains to be seen.

Road tax

Again, the UK authorities in particular have made substantial mileage out of electric cars, attempting to attract more users to this mode of transport via the road tax system. More economical and environmentally friendly cars are currently attracting a lower level of road tax with the cost of road tax for larger petrol and diesel fuelled vehicles having increased substantially in recent times.

As we suggested with the tax on fuel, whether this be petrol, diesel or electric, the UK government will at some stage need to rebalance the situation with a likely increase in electric car road tax as and when these vehicles become more popular. They will no doubt argue that the introduction of new power supplies, new regulations and the maintenance of roads have "forced their hand" but ultimately they will be looking to replace like-for-like taxation income.

The Green Revolution

The last few years have seen a significant push for recycling and modes of transport which are more environmentally friendly and cheaper to run. Even though the UK government, and other governments around the world, have invested billions upon billions of pounds in the "green revolution" there is a feeling that taxpayers are being tempted into to this new revolution only to be hit by increasing taxes in the future.

One example of this particular type of government policy is the recycling of waste which was introduced as a way for taxpayers to reduce their local council taxes and help the environment. Now that the vast majority of local councils, consumers and businesses around the UK have embraced the fashion for recycling, we are starting to see introduction of on the spot fines for those who do not "recycle enough".

The bottom line

The bottom line is that the UK government, and all governments around the world, receive a substantial income from oil, petrol and diesel related activities. The introduction of electric cars has the potential to wipe out the income from petrol and diesel related taxation for all governments, forcing them to replace these with other taxation income streams. Electric cars are seen to be both environmentally friendly and also highly efficient so no doubt the government of the day will argue that substantial savings should be enjoyed by consumers, businesses and the government alike.

Conclusion

There is no doubt that the potential wipeout of significant income streams for the UK government, and other governments around the world, has been one major factor in the relatively slow development of the electric vehicle market. Until the authorities work out a way to replace these like-for-like tax income losses it is unlikely we will see an immediate uplift in the promotion or the uptake of electric vehicles.

As ever, everything comes down to money and the ever increasing tax load on UK consumers and businesses!