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How will we fund the future of motoring?

Image of James Fossdyke
Author: | Updated: 17 Sep 2015 16:44

A British city centre, 2050. Everything is quiet.

Cars powered by electric motors creep by soundlessly, some or all of the drivers relaxing languidly, cup of coffee, pain au chocolat and digital edition of The Times in hand.

Sirens are redundant now the connected cars know when emergency vehicles are coming, while petrol stations have almost died out as the demand for fossil fuels is reduced to the bloke at number 63 who drives one of those gorgeous, but rather ancient Mercedes-AMG GTs on high days and holidays.

Okay, maybe it’s an idyllic view of a 2050 city centre, but it’s one that could, in all possibility, be accurate. If it is to be our future, however, it is going to cost serious money.

Mercedes-Benz F 015

Investing in energy

Charging infrastructure will need to be seriously improved, possibly with the addition of wireless charging systems in the road (which means new roads all over the country), and putting that sort of set-up in place around the country is likely to cost billions and billions. It’ll make the £42bn they’re planning on spending on HS2 look like small change. And that doesn’t include the cost of powering it all.

With energy companies warning of blackouts before the electric cars take hold, sending power to every main road in the country 24/7 and powering 30 million households as they charge up overnight is going to mean an enormous investment in energy.

Mercedes GLE 500 Charging

Even if we turn to hydrogen, we’re going to need more electrons flowing around the grid. Hydrogen may well be the most abundant element in the universe, but it’s usually tagged onto other things, such as oxygen, and separating it is an energy-hungry process.

Producing that sort of power will require more power stations – including nuclear ones – and the going rate for just one power station? Nearly £6bn, plus however much it costs to run.

Raising the money

So where’s the hard cash going to come from? If the only cars emitting carbon dioxide are the classics driven by enthusiasts on sunny bank holidays, even the 2017 road tax system is going to raise the square root of stuff all.

Then there’s the reduction in income from fuel duty and a cut in tax income from company car drivers who, presumably, will all run around in driverless electric cars, thus dramatically reducing the effectiveness of the current benefit-in-kind system.

Google self-driving car

Driverless cars will cause the government other headaches too, like a drop in the number of penalty charge notices for speeding, although theoretically speaking, more autonomy should reduce the amount of public money required for road policing and cleaning up accidents.

The obvious answer to it all is a pay-as-you-go road usage tax, which would see motorists pay every time they drive. If the RAC Foundation is to be believed, 18% of the country’s drivers supports a PAYG road tax system, which sounds good, but look at it this way: 82% of us are either dead against it or have no opinion either way. Chances are it’d be politically unpopular.

Taxation by battery size has been mooted too, while a hefty tax on electricity seems to be a popular plan, despite the fact that even those who don’t drive will be penalised unfairly, as will those using fuels such as petrol, diesel, LPG and hydrogen.

Wave bye-bye to subsidies

Whatever happens to tax, you can be pretty confident that the existing subsidies will be long gone. Osborne’s 2017 road tax system is a tacit acknowledgement that the government can’t go on making environmentally friendly motoring the cheap option indefinitely.

The £5,000 Plug-In Car Grant has already far exceeded original expectations and we all know it’s unsustainable – particularly against the backdrop of austerity. So eco-friendly cars will become even more expensive to buy and the already high lease rates will sky-rocket once more.

Mitsubishi Outlander PHEV GX5h

Of course, all this is speculation and forthcoming governments will doubtless create their own initiatives, but one thing seems certain: the future of motoring is unlikely to be cheap.

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