Electric Cars to Reach 20% of U.K. Vehicle Sales by 2016

Electric cars will make up 20 percent of U.K. auto sales by 2016 as drivers take advantage of government subsidies and lower fuel costs, according to National Grid Plc Chief Executive Officer Steve Holliday.

“Our base scenario has a million electric cars on the road in 2020,” Holliday, who runs the U.K.’s power grid, said in an interview in London. This would mean about one in five of all cars sold in the U.K. from 2016 will be electric, he said.

The U.K. is using subsidies to promote electric vehicles to reduce carbon dioxide emissions. Motorists will receive as much as 5,000 pounds ($7,795) from January if they buy an electric or plug-in hybrid car. As much as 8.8 million pounds has been earmarked to support the development of a national recharging network, intended to boost the number of roadside plug-in points to 11,000 by 2013 from about 300 today.

The Nissan Motor Co.’s LEAF and Mitsubishi Motors Corp.’s iMiEV will be the first two electric cars to go on sale in the U.K. within the next few weeks, Colin Couchman, a London-based analyst with consultant IHS Automotive, said in a telephone interview. The cars will cost about 29,000 pounds and can be charged using a regular household plug, he said.

“At the start, people will plug in at home or at work,” he said.

In 2009, there were 31 million cars in the U.K., according to the U.K. Society of Motor Manufacturers and Traders, or SMMT. The average daily distance traveled by British drivers is 25 miles and the length of a single journey is 8.6 miles, the society estimates.

Struggle for Balance

While National Grid’s high-voltage electricity transmission system can manage the demand of 1 million electric cars, “penetration up and above that becomes a real issue,” Holliday said. Local distribution networks in cities like London may struggle to balance their grids if drivers choose to all plug in their cars at the same time, he said.

The cost of charging an electric car with the LEAF’s 100- mile range could cost as little as 96 pence and take between six and eight hours, according to an SMMT report. “Depending on how fast it charges, an electric vehicle can draw as much power as a house,” Bloomberg New Energy Finance analyst Albert Cheung said in an e-mail. “So if half a dozen neighbors plug in electric vehicles on the same street, it could push the local transformer over its rated capacity.”

Other incentives being adopted to encourage the use of electric vehicles in the U.K. include not having to pay central London’s 8 pound-a-day congestion charge and free parking in some neighbourhoods.

Total fuel costs of operating a standard car, driving 10,000 miles annually over a three year period, are around 2,767 pounds, compared with 756 pounds for an electric car operated over the same time period, according to the SMMT.

Across Europe

European emissions standards taking effect in 2014 that require carmakers to cut nitrogen-oxide emissions for diesel engines by 56 percent may boost demand for hybrid and electric motors. Few diesel cars now comply with the new, Euro 6 regulations.

The Euro 6 rules may help raise the share of hybrid and electric vehicles across Europe to 13 percent by 2020 from about 0.1 percent today, according to IHS.

European carmakers including Bayerische Motoren Werke AG, PSA Peugeot Citroen and Daimler AG are developing electric and hybrid vehicles to help meet tighter environmental regulations and expand the product line-up to boost sales.