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Eco Cars and Financial Implications

Cars
Eco Cars and Financial Implications

With the dependence of many countries on non-renewable fossil fuels, there is a conscious effort now to push for sustainable development Green technology is a popular advocacy today to help conserve our energy consumption and natural resources.

Joining the bandwagon, many vehicle manufacturers strive to earn a positive association of environment responsibility for their brands. For this reason, many environment friendly vehicles or eco cars have been developed. But will eco cars be friendly to the pockets of people as well? What is the economic impact of these environment friendly vehicle designs?

Gauging the Economic Impact of Eco Cars

As the call for environment responsibility grows louder with each year, many expect that the price tags of eco cars may become more affordable down the line. Eco cars are more expensive today because they can consume energy more efficiently and some are even powered by electricity.

While the price may not drop down dramatically, the price of eco cars may not go up as well. This is highly possible as car builders start to become comfortable with cost efficient means to build eco cars.

Once countries fully embrace the use of eco cars, car manufacturers that are still reliant on gasoline and diesel powered vehicles may find themselves in a financial abyss. These traditional car companies may lose relevance and even revenues. Energy companies may follow suit as well.

Expensive Eco-friendly Cars

The best eco cars are almost out of reach of the bank accounts of average-earning people. However, these have already attracted the attention of celebrities and this may help shift policies and perception to make eco cars more affordable. Here are the best eco car models in the market today:

• Rimac Concept One: $1 million

Gyuszkofoto / Shutterstock.com

The Rimac Concept One is the world’s first electric hyper car with a special propulsion concept for exceptional horsepower and sleek design. It has a low center of gravity and its 92 kWh battery pack can reach up to 370 miles. Deliveries will start in 2013 and only 88 units will be manufactured.

• Tesla Model X: $55,000 to $75,000

Phil Stafford / Shutterstock.com

Tesla Motors designed Model X to integrate the best features of an SUV with an all-electric car model. It can accelerate from 0 to 60 miles per hour in less than five seconds. Production will start in 2013 with deliveries in 2014.

• Fisker Karma Hybrid: $102,000

Zoran Karapancev / Shutterstock.com

The Fisker Karma Hybrid is a luxury sports vehicle that can provide high performance and low environment imprint. Its 22 kilowatt-hour lithium-ion battery can power up to 50 miles of electric range. It even has a large solar glass roof to harness solar energy for an additional 200 miles per year.

• Lightning GT All-Electric Sports Car: $239,400

Credit: Lightning Car

This sports car is one of the first to use a lithium-titanate battery that can be charged in minutes. It can accelerate from 0 to 100 kilometers per hour immediately in just under five seconds. It has a top speed of 200 kilometers per hour.

• Eliica Eight-Wheeled Electric Car: $255,000

Credit: Eliica

The Eliica has eight wheels and its electric motors can produce 60 kilowatts. In less than four seconds it can sprint to 60 miles per hour and jump to 100 miles per hour in just three more seconds. Presently, there are only two available units but the Eliican team can manufacture up to 200 units with funding.

The Latest Affordable Eco Cars

Vehicle manufacturers have been trying hard to create affordable eco cars to help spread the word about environmental responsibility. Here are other models that may be well within reach of middle class people:

• Renault Fluence ZE: This is an electric car that is free of emissions. It can reach distances of 115 miles when fully charged.

• Vauxhall Ampera RE-EV: This is a car model with minimal carbon emissions of just 27g per kilometer. It has a 1.4 liter petrol engine that provides the car fuel efficiency of around 235 mpg.

• Volvo V60: An estimated fuel efficiency of 150 mpg is possible with this car’s combination of a five cylinder 2.4 liter diesel engine and electric motor. It has a low carbon emission rate of 49g per kilometer.

• BMW ActiveHybrid5: This BMW model has 16% less fuel consumption and carbon emissions compared to other similar BMW model. It only has carbon emissions of only 150 grams per kilometer.

Reduction in Motoring Revenue

Electric cars are enjoying tax breaks because of its lower fuel consumption. But this may also mean a collapse in revenue sources especially with fuel and road taxes possibly drying up.

Research from IFS and the RAC Foundation indicate that fuel duty taxes will drop from 1.7% of the GDP to 1.1% by 2029. Vehicle excise duties will likely fall from 0.4% of GDP to only a minute 0.1%.

The likely implication is that drivers may end up with higher taxes as the industry shifts to green technology. Governments are looking to review tax policies to make sure that drivers will not be punished with harsh tax impositions when they choose to have fuel efficient cars.

But a possible hole in treasury budgets is too significant to ignore. When left unattended, it may create deficiencies for budgets for motorists. It may even lead to the decarbonization of transport roads.

The IFS suggests that it will be better to impose road taxes based on congestion and mileage instead of charging higher fuel duty taxes. Accordingly, additional taxes on fuel will not reflect on roads that accommodate high volumes of motorists. In fact, some rural areas that only have light to moderate traffic flow have been rated as overtaxed.

It is important to remove the dependence of taxes and motoring revenue on petrol taxes. When environment friendly cars start to dominate roads and highways, petrol taxes will start to dwindle and may even drop to almost zero.

Government research have predicted that road traffic will increase to 44% by 2035. Many experts believe it will be more practical to base taxes on road volume instead of the erratic prices of petroleum. This will help encourage more motorists to switch to green technology.

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