I recently overheard an interview in which the irrationality of Slovaks who refuse to buy more economically advantageous electric cars was criticized. Quite often, I encounter the fact that owners of electric vehicles fail to look at this problem through the eyes of the average driver.
First, it is important to realize that the average Slovak drives either a second-hand car or his old car. In September alone, 5,000 individually imported cars were registered in Slovakia. New vehicles are mainly bought by companies, only 1.5 thousand more of them were registered. The average age of vehicles of almost 15 years is the most telling indicator of the purchasing power of Slovaks. Austrians own on average the youngest cars in the European Union with an age of 9 years.
A new car is still a luxury good, you need 13 net Slovak average wages for a new car worth 15,000 euros, in Austria only five. There, almost twice as many new cars are sold per capita than in Slovakia. Central and Eastern Europe is thus a natural destination for the “second” life of cars from Western Europe. This has been greatly helped by rising net wages and the economic miracle called cheap oil.
Why Miracle?
Oil costs the same as it did 18 years ago. In the same period, the price level in Slovakia has risen by 70%. Therefore, paradoxically, fuels are contributing to the falling price indices. The reason is the massive exploitation of the oil sands in the US and the global increase in the efficiency of oil extraction and transport. To this must be added more efficient processing in refineries. As a result, a Slovak can buy twice as much petrol and diesel from his net wages than in 2012. The operation of internal combustion cars has thus become significantly cheaper in terms of income.
On the other hand, electricity has become more expensive over the years. If we take into account industrial consumers, which are operators of public charging stations, Slovaks can buy only a third more electricity from them than in 2012. The operation of electric vehicles has thus become relatively more expensive, and if we look at electricity price forecasts, no significant drop is expected in the coming years.
The development of electromobility is not helped by the still-high price of electric cars. The long-awaited introduction of an affordable electric car from the Trnava factory (Stellantis, plant in Slovakia) has disappointed many. The family car, with a range of 320 km and a speed limit of 132 km/h, came in at 23,500 euros. A significant drop from the past, but it is still 57 % more than its combustion version.
True, the electric car is powered by electricity cheaper than petrol. But with an annual range of 15,000 km, it will take more than 7 years for these savings to pay for the extra cost of the more expensive car. That is also assuming one can charge it in the house at the artificially reduced price of household electricity. Charging at public chargers will take up to 11 years to recoup the surcharge.
A glance at Chinese importers’ price lists for cars in this class is also not rosy at all, and the import tariffs have not even started to kick in yet. These figures would be much higher if the owner of a combustion car did not pay an environmental tax of 61 cents (excise duty + VAT) for every liter of petrol burnt.
The average Slovak driver behaves economically and rationally, given his purchasing power. He is interested in a low price because he does not want to be primarily an investor in the car, but a consumer. The answer to the question of what the value of an electric vehicle will be in 8 years is quite difficult to find today, because of the rapid development in this area.
As long as there is not a wide second-hand market for electric cars in Germany and a sufficient network of qualified and accessible service stations in Slovakia, the number of electric cars will grow slowly. All these factors plus the relatively low price of petrol and diesel allow drivers to stick with the old, tried-and-tested choice.
This article was originally published in Slovak in Denník N on October 29, 2024.
Continue exploring:
How Russian Economy Is (Not) Doing Well
2024 U.S. Presidential Election with Garvan Walshe [PODCAST]
