ECONOMYNEXT – The flood of electric cars may be a dream come true for a well-heeled few, but do they really contribute to a cleaner environment or fill state coffers in the same way as other motorists?
Electric cars are more expensive than petrol, or diesel-powered vehicles, which means more foreign exchange leaves the country to import an electric vehicle (EV).
The tariff on an EV is also much lower than that on a fossil fuel-powered vehicle. As a result, the state earns far less tax revenue on every dollar spent to import an EV.
While the prohibitive 200 percent + tax on diesel and petrol vehicles is aimed at discouraging their import, the state derives the bulk of its revenue from them.
Cheap Electricity
EVs are marketed as a “greener” alternative, but this claim is questionable when considering how electricity is generated in Sri Lanka.
About half of the country’s daily electricity comes from coal and diesel oil as of October, though the number has been higher in some months.
Therefore, charging an EV from the national grid does not significantly reduce the environmental impact compared with using a conventional petrol or diesel car, also known as ICE or internal combustion engine vehicles.
Moreover, when an EV is charged from the grid, no taxes are paid, unlike at the petrol pump, where about half of the cost of petrol goes to the state as tax. Every time a motorist tops up their tank, they also top up state coffers. Not so with EVs.
If EV’s use commercial charging, some VAT is collected.
Solar Panels
EV owners argue that they use their own solar panels to charge their vehicles and thus place no burden on the national grid. Yes and no. Fast charging is not possible from a domestic charger.
Installing one’s own solar panel system involves a very high initial cost, meaning more foreign exchange is spent to import the necessary equipment. Those solar panels are imported tax-free. Once again, there is no direct benefit to the treasury. EV users solar-power generation is also subsidized.
Instead of focusing on the promotion of electric vehicles, Sri Lanka should improve public transport. Ideally, there should be more incentives, at least in the short term, for petrol vehicles, as those motorists contribute to state revenue every time they drive, unlike EV owners.
While electric vehicles may offer certain advantages, they are not the ideal solution for Sri Lanka, certainly not while the national grid is largely dependent on coal and diesel. Sri Lanka is only shifting pollution from its roads to Norachcholai, Kelanitissa, Kerawalapitiya and a few other places where thermal generators are located.
The country should focus on developing sustainable public transport that benefits all citizens, not just the wealthy few driving EVs.
Firefighting
Another glaring deficiency is the lack of equipment or training for police, firefighters and paramedics to deal with accidents involving electric vehicles. Attending to an EV crash poses a high-voltage danger to passengers, pedestrians and first responders.
There is nothing in the public domain to suggest Sri Lanka’s traffic police are trained to deal with emergencies involving EVs or even hybrid vehicles. Countries such as Australia have recognised the need for specialised training to deal with EVs and have extensive programmes to educate first responders as well as the public.
Australia has a National Electric Vehicle Strategy, which includes training on how to handle EV incidents and high-voltage lithium-ion batteries, which also contain highly hazardous material.
Greenwashing
On a purely environmental note, there is no evidence that importers of EVs or hybrid vehicles have set up any facility for recycling the batteries of their vehicles. The requirement to have a battery recycling facility was initially a condition for allowing EV imports during the ban on other vehicle imports between 2020 and February this year. Again, there is no evidence to suggest that this condition was fulfilled.
In a few years, Sri Lanka could end up with a mountain of discarded EV batteries that will be a bigger hazard and threat to public safety than anything the country has had to deal with so far.
Level field
I am not arguing against EVs, but I oppose the special concessions they enjoy while others are taxed to the maximum, both at the time of import and during use. Considering the loss of revenue to the state from the operation of an EV, the electric vehicle road tax (annual licence) should be adjusted to recover this loss.
A previous government imposed a similar surcharge on diesel-powered vehicles used for non-commercial purposes. The argument then was that these vehicles, mostly vans, were using subsidised diesel and thereby causing a loss to the state. Now that diesel is no longer subsidised, that argument no longer holds. However, a similar tax could be applied to EVs.
The green argument for electric vehicles simply doesn’t hold up, given the subsidies continually granted to EV users, who contribute far less to state coffers than users of internal combustion engine vehicles.
These petrol heads should be seen as the true heroes in defending the economy and subsidising the green dreams of a wealthy few.
(The writer is a regular user of public transport who switched to his own three-wheeler over two decades ago)
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