What would happen if every car were electric?

The Nissan Leaf is one of many all electric cars on sale in the UK.

ELECTRIC cars are often being heralded as the future of motoring as fuel supplies continue to dwindle. This has led to most of the governments in the developed world encouraging the adoption of environmentally friendly vehicles through tax breaks.

The UK is no exception to this, but what would actually happen if every driver in the country suddenly ditched their current vehicle in favour of an environmentally friendly electric alternative? Well, it would cost the government approximately £24-billion per year according to price comparison website MoneySupermarket.

Unsurprisingly fuel duty made up 80% of this total, with British motorists currently facing the highest fuel duty rates in the whole of Europe. The rest was made up of road tax and congestion charging, with electric vehicles being exempt from both of these.

Tax accrued from car insurance would also take a bit of a hit, with insurance premiums being on average 5% cheaper for these environmentally friendly vehicles with smaller engines.

The government would gain an additional £418-million from tax placed on electricity, but the way that tax is gained would need to be seriously reviewed if this were to become a reality.

It is possible that the government will start to place a higher rate of tax on electricity charges and possibly also pump up road tax charges which will start to cover electric cars.

If anything this study really highlights the reliance of the British government on motorists as a means of tax generation.

It was also found that the average motorist would reduce their annual running costs by £952 per year if they adopted an electric vehicle. This would be a very important saving at a time when household budgets are being squeezed.

However, when you consider that a brand new Nissan Leaf is over £12,000 more expensive than a basic Ford Focus, it would take quite a long time before the financial benefits started to be felt.

The findings have been summarised in the following infographic:

Image source: MoneySupermarket Car Insurance