-We saw in a previous video the methods that can be used to quantify the gains of switching to electric vehicles and we will apply these methods on the basis of a 2011 study by the Commissariat général au développement durable, linked to the French Ministry of Transport, on whether electric vehicles are of more interest to society than thermal vehicles. In this study, we will compare vehicles from three categories, a gasoline vehicle, a diesel vehicle, and an electric vehicle with a range of approximately 150 km. These vehicles will be owned for 15 years, and will travel 13 000 km per year. The discount rate used for economic calculations is 4%. Assume also that a carbon tax is introduced, at the rate given next to me on the slide, 32 euros per ton in 2010, 56 euros per ton in 2020, and 100 euros per ton in 2030. It is also assumed that, to prime the electric vehicle market, a purchase bonus is implemented, with a value of 5 000 euros in 2010, which starts to decrease in 2015, and reaches zero in 2020. Of course, we must make assumptions about the vehicles' consumptions, and as you can see, the thermal vehicles here are extremely fuel-efficient, with very low consumptions that hardly reflect reality, whereas the electric vehicle has a consumption of 20 kWh/100 km, which is more than it has in practice. This means that, among the figures of this study, CO2 and pollutant emissions of the thermal vehicles are relatively low, and the power consumption of the electric vehicle is somewhat overvalued. We will start by calculating the total cost of ownership of these vehicles. As you can see, the electric vehicle is slightly cheaper than the gasoline vehicle, but the additional cost of the battery significantly increases the cost of the vehicle. However, the cost of the battery drops significantly between 2010 and 2020, thanks to technological advances, which are possible only if electric vehicles sell well, therefore manufacturers have an interest in investing to reduce the cost of these new vehicles. Add to this the maintenance costs, including insurance and so on, which usually exceed purchase costs. Finally, energy costs, i.e. the cost of gasoline or diesel for the thermal vehicles, and of electricity. Obviously, the thermal vehicles have higher energy costs than the electric vehicle, but we see that the 2010 prices do not compensate the cost of the battery. The electric vehicle is more expensive at 2010 prices. However, thanks to the drop in battery price from 2010 to 2020, the electric vehicle becomes competitive. In 2020, it is not more expensive than its thermal equivalents. Normally, the costs of the charging stations should also be taken into account, but we see that the share left with households is relatively low, as most costs pertain to fast-charging stations, way more costly, but paid for by the public authorities. Here too, the costs decrease between 2010 and 2020 in this study. Now, in order to assess the gain for society of using electric vehicles, we must quantify the costs of the externalities generated by the three vehicle categories. Let us start with the costs linked to CO2 emissions. First of all, we see that the electric vehicle running on French mix emits less CO2 than its thermal counterparts, which is not the case here for the electric vehicle running on European mix. Remember, this is due to the assumptions of this study, a relatively high consumption for the electric vehicle and low consumptions for the thermal vehicles. In another video on the well-to-wheel analysis, the difference is much more marked between the electric vehicle running on European mix and the thermal vehicles, but I wanted to keep the assumptions of this study. We also see that, in the end, the social cost, determined using the prices indicated for the ton of CO2, is relatively low, approximately 1 000 euros for vehicles with a total cost of ownership around 50 000 euros. In the end, the CO2 externality has a relatively low social value. We also see that when the price increases between 2010 and 2020, from 32 to 56 euros per ton, it more than compensates the gains in consumption, and therefore the social value of CO2 emissions increases over time, even though the consumption decreases. Regarding air pollution, the magnitudes are roughly the same, and we also see that the vehicle running on French mix is the most interesting, that the diesel vehicle emits more particles and nitrogen oxide, and thus has a greater social cost linked to air pollution, but also that once again, the vehicle running on European mix is not very interesting in terms of reducing pollutant emissions. Finally, we see that the externality of noise has the same magnitude, that the gain from switching to an electric vehicle exists but is relatively small, as the noise generated by this vehicle as it travels outside the city is approximately of the same nature, as explained in the video on noise. So as a whole, the social gain associated with an electric vehicle with the best possible electricity in terms of CO2 and local air pollutant emissions, namely French nuclear electricity for now, is approximately 2 000 euros. Remember that the study assumes a 5 000-euro bonus. As we see, the social gain does not justify such a bonus. Let us now look at how witching from a gasoline vehicle to an electric vehicle running on French mix changes the costs for each actor. Let us start with individuals who, when buying an electric vehicle, must bear the cost of the battery, a cost they do not have to bear when buying a gasoline vehicle. Battery excluded, the purchase cost is lower, there is therefore a slight gain in terms of purchase cost, and also a gain in energy cost. It is the opposite for the state, who receives more VAT on the battery, but less taxes on oil products, and less VAT on the purchase. In total, if we add the two, we see that the costs per actor exceed the gains. With the new 2020 values, we see that the battery costs significantly decrease for the vehicle purchaser, which means less VAT on the batteries, but also a change in energy consumption leading to a lower loss from the tax on oil products. Now, if we add the purchase bonus and the carbon tax that is avoided, we see that it increases the gain for the electric vehicle purchaser, who receives this bonus and does not have to pay the carbon tax, but the state must obviously fund this bonus, and not receiving the carbon tax becomes a loss compared to the purchase of a gasoline vehicle. Adding the costs of the charging station slightly increases the cost for households, but increases the cost quite significantly for the state. Add to this the distortionary effect of taxes, which causes the money that must be drawn to pay the bonus to generate a loss of net wealth created, as explained in the video on the distortionary effect of taxes, and this cost of public funds adds, for the state, to the cost of the bonus and of the lower income from the carbon tax. Finally, if we deduct the social gain from switching to an electric vehicle, and allocate it to the state as community representative, as it is the community that benefits from the improved quality of the environment, we see that switching to an electric vehicle becomes more interesting for the state. If we look at the total costs for each actor, we see that at 2010 prices, for an individual or a company, purchasing an electric car rather than a gasoline car leads to a net extra cost of 6 153 euros. Conversely, once the price of batteries has dropped, even without the purchase bonus, individuals and companies who purchase an electric car will gain just over 800 euros. In contrast, the cost is very high for the state, as it must fund the bonus with a marginal cost for public funds of 30% in this study, it also receives less taxes on petrol, it must fund the charging infrastructure, and it loses some VAT on the purchase. Remember that here the costs are net, this cost of 10 500 euros takes into account the gains in terms of emission reduction. At 2020 prices, we see that there is still a net cost for the community, but it is very important to remember here that in our case, the social value of the environmental gain of electric vehicles might have been strongly downplayed by assuming that the thermal vehicles were very efficient, unlike the electric vehicle. We see that as a whole, at 2010 prices, it is very costly to switch to an electric vehicle, and that it is still slightly costly at 2020 prices, but other assumptions would probably lead to a gain for the community. As a conclusion, there are indeed environmental gains from switching to electric vehicles, but which depend on the assumptions about the evolution of the environmental performance of thermal vehicles, and the social value is not that high, notably when compared to the total cost of ownership. Some gains obviously depend on the decarbonation of the electric system, some gains currently depend on whether the electricity is nuclear or decarbonated, and this gain is much lower if the electricity is, like the European mix today, still partly based on fossil energy, namely gas and coal. The cost decrease assumed in this study, notably that of battery cost, obviously depends on the deployment of electric vehicles. If electric vehicles do not sell, manufacturers have no interest in using research and development to lower the cost of batteries. It is therefore a path dependency, and to benefit from this cost decrease the electric vehicle market must be primed, hence the relevance of implementing a purchase bonus, as a first step, to prime the electric vehicle market. Finally, we see that the gain is necessarily long-term. There may be short-term losses, therefore the gain must be evaluated over a long lifetime, which is that of the charging infrastructure, of the research and development activities, and so it is important to note that even with the short-term costs of switching to electric vehicles, it is important to prime the electric vehicle market, in order to achieve long-term gain.
