Thursday, 12 November 2009

Accounting for Electric Cars

Mitsubishi are anxious to promote their MiEV electric car and we applaud the green technology behind this little runaround.

However, the MiEV offers a good example of how even trained accountants should consider things in a holistic way.

The MiEV is extremely cheap to run at around 1p per mile for electricity compared with a comparably sized conventional car which would cost about 9p per mile for fuel depending on oil prices: a saving of 8p per mile! Don't get too excited, though, because a MiEV costs £30,000 to buy whereas a modest little hatchback would otherwise be about £10,000. How many miles, then, must the MiEV travel in order to pay back the extra outlay? The £20,000 difference in price is 2 million pence. The number of miles, therefore, is 2 million divided by eight pence, 250,000 miles.

That's a very long way in a little car.

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