Free Electric Car

Do you want a free electric car? We look at ways in which this could be made possible in the future.

How the electric car industry is working towards a radical price

I am often asked whether electricity will become the dominant fuel for cars in the next few years. I believe it will but the timescale for this switch is unclear. Much of it will depend on the cars that become available and how quickly consumers see the benefits and advantages of electric cars.

Many industry commentators believe that by 2020, only two or three percent of the cars on our roads will be electric. Renault and Nissan believe the take-up will be much faster, with 10% of all new cars being electric powered by 2020.

Undoubtedly there will be a few incidents along the way and just as undoubtedly, some cars will be better than others. Yet I personally believe that at some point, electricity will become the dominant fuel for cars and that the take up could be much quicker than currently anticipated.

My reasoning is one of simple economics. In the long term, oil prices are only ever going to go up higher and higher. Meanwhile, the price of an electric car is going to fall. Eventually, the entire cost of leasing, running and maintaining an electric car will be cheaper than the cost of putting fuel into a conventional car.

At that point, the cost of the electric car itself is effectively zero.

Anyone want a free car?

Throughout the world, top economists have been talking about how business and buying patterns will evolve over the next thirty years.

There is consensus amongst these economists that the real cost of many products and services will drop significantly, to the point where many of the products and services we currently pay for become free.

In his recent book, Free: the Future of a Radical Price, Chris Anderson argues that the economics of abundance forces the devaluation of products and services to the point where they are virtually free. Zero pricing is changing the face of business. Chris argues that businesses and industries have the choice of either adopting this strategy for themselves or becoming victims of it.

For a product to be free there has to be another product or service that can be charged for. The free product must also be low maintenance with negligible ongoing costs associated with it.

The mobile phone model

A good example of a free product that we all have and use are cell phones. If you walk into a cell phone shop, almost all the phones are offered free of charge. You simply choose the model, choose your usage tariff and off you go. If you are an existing customer with an older phone, you can upgrade your phone and still not pay anything for your new purchase.

Of course, you do actually end up paying for your cell phone through your usage tariff. But because this usage tariff is comparable in price to the line rental and use of a fixed line telephone, the effect is you're getting a free phone: if you cancel your fixed line phone at home, you're saving money and getting a free phone into the bargain.

The actual manufacturing cost of the phones is most certainly not free. Many phones actually cost many hundreds for the phone companies to buy. The profits made on monthly usage charges are used to write off the cost of the phone itself.

Making the mobile phone sales model work for electric cars

By removing the dependence on oil, this sales model will be able to work for electric cars in the future. The cars themselves will be free and customers choose a usage tariff that suits them.

Usage tariffs will directly replace the fuel bills that everyone has to pay to use their existing cars. It will be calculated to work out either the same cost or slightly cheaper than the cost for putting fuel into a combustion engine car.

So instead of paying £250 or $250 per month for fuel at service stations, you would pay a similar amount each month for the usage plan on your electric car. The electric car itself would be free. At the start of your contract you'd be able to go into the car showroom, choose the car that you want and simply drive it away.

Given the choice between buying a $15,000 car with a combustion engine and then paying $250 per month on fuel, or just paying the $250 a month on a usage plan and getting the equivalent electric car for free, which would you choose?

Of course, none of this is going to happen overnight. It took the mobile phone industry around fifteen years to get to the point where phones were given away free of charge and it will certainly take a number of years for the car industry to get to the same position.

Expect it to happen. Walking into your local car dealership will be like walking into your local mobile phone store.

Of course, this model could only work with electric cars. With hydrogen cars or petrol/gasoline or diesel cars, you still have to pay for fuel so there is no cost saving available to customers. For that reason and that reason alone, electric cars will become the dominant type of vehicle on our roads.

Why would anyone choose anything different?

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