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.

No comments:

Post a Comment