Electrify your ride


The road to pure electric mobility leads through hybrid technologies, which have already claimed their place in global car markets. But what does it take to electrify Hungary’s car fleet?

Although large players of the energy sector have started raising e-mobility awareness, e-mobility as such is practically non-existent in Hungary, according to a recent study released by PwC Hungary.

The awareness-raising initiative of these companies is one of the promising signs in this segment: RWE, E.ON and MVM are paving the way by introducing electric cars in their company fleet and have started the development of a charging station network in Budapest. What’s more, one can now travel to Budapest from Vienna by electric car as three charging points, in Győr, Mosonmagyaróvár, and Tatabánya, were completed mid-April.

But if the e-vehicle segment in Hungary is to grow further, a well-developed charging infrastructure is crucial.

“Currently, the charging network is marginal. However, along with an adequate government incentive scheme, this part would be the most important thing to help the introduction of electric vehicles on a mass level,” the PwC study finds.

According to PwC, there could be some 45,000 electric vehicles on the roads of Hungary by 2020, 1.2% of the national car fleet total. The company’s calculations show that at least 68,000 charging points will be needed to keep these vehicles moving. As home charging during the night and day charging at work are expected to be the most common ways of recharging vehicles, the required number of public charging points is a little over 25,000, the study says.

Recharging an industry

The spread of the use of e-vehicles will certainly have an impact on the energy industry. When trying to assess the electricity generation necessary for e-vehicles, the study says it is important to establish how electricity consumption will develop in the future and which forms of electricity generation, be they nuclear, wind power, biomass, fossil fuel power plants, or renewable energy sources, can be implemented.

Battery charging levels required can be calculated on the basis of the number of electric vehicles on the market, as well as on the basis of traffic volume. Batteries will be charged via the public power grid. As energy is lost during the charging process, there will be less electricity in the battery compared to the amount that has been charged from the power grid. Analyzes based on charging stations available on the market have shown that the loss factor for an average battery charging station is 20%.

The PwC study outlines three scenarios for the future of e-vehicles in Hungary: the optimistic one foresees some 189,000, the realistic 45,000, and the pessimistic 27,500 vehicles running on the roads by 2020.

Calculations show that e-vehicles’ share of the national electricity demand will not be higher than 1.1% even in the optimistic scenario, and will be as little as 0.2% in case of the most pessimistic predictions.

It is clear that the electricity demand of e-vehicles is quite marginal, the study states. Existing network capacity is already sufficient, thus the electric vehicles alone would not require construction of additional power generation capacities.

Incentives needed

First of all, there are infrastructure investment costs related to e-vehicles. The PwC study calculates varying investment costs due to the different technical requirements of charging points – home-based, public and fast charging points have different financial needs. One consumer will most likely use a home-based charging point, while at public stations a multi-user interface has to be established. The fast charging capability of large charging stations calls for increased power capacity.

Financial incentives will also be needed to make the use of e-vehicles more popular. In Europe, such incentives – an average of €5,000/car - are already in place. These incentives may include many forms, such as tax benefits, free parking, or waived traffic fees. According to PwC’s expectations, there will be no need for excessive financial support in 2020, but in order to keep up with the figures in the realistic scenario, the financial support required in the coming years would be substantial.

But there are inevitable negative financial effects in the long-term. PwC claims that there will be a significant loss coming from reduced fuel consumption, which will result in less income from taxes and duties imposed on petrol and diesel. That loss might be as high as €40 million a year by 2020. Although this will be compensated somewhat by the additional tax income on increased electricity sales, this revenue will only amount to one-tenth of the tax loss due to the lower tax content and higher energy efficiency.

On the benefits side, however, fuel consumption can also be mentioned: at a national economy level, less fuel will be required, thus reducing crude oil import and therefore related costs for the national economy. The positive impact on finances is in the magnitude of €35 million per year, the PwC study says.

Also, reduced carbon dioxide generation results in a higher amount of CO2 capacity to sell, which could bring in about €2 million a year.

Although it is almost impossible to reliably calculate the benefits of secondary effects such as better health due to lower air pollution and less noise emission, the current health condition of Hungary’s population indicates that any change in this area might have a significant economic and financial impact.

The long-term success of electric cars is very much dependent on the success of other alternative propulsion systems technologies, the study says in summary. The wide acceptance of various types of hybrid and fuel cell vehicles could mean that a big chunk of the demand for these vehicles will be met, and therefore the growth of the share of electric vehicles will be slower. It is however certain that the road to pure electric mobility leads through hybrid technologies, which have undisputedly claimed their place in global auto markets already.

This article is based on PwC Hungary’s e-mobility study titled Development of the electric vehicles segment in Hungary

Real Net Wage in Romania Rises in February Figures

Real Net Wage in Romania Rises in February

Gov't Considering Fuel Price Intervention Government

Gov't Considering Fuel Price Intervention

Yettel Magyarország Revenue Climbs to EUR 615 mln in 2023 Telco

Yettel Magyarország Revenue Climbs to EUR 615 mln in 2023

Tribe Hotel Budapest Stadium Recognized at LIV Hospitality D... Hotels

Tribe Hotel Budapest Stadium Recognized at LIV Hospitality D...


Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.