We need to put a brake on pricing of electric cars
The pricing for electric cars in Bermuda just doesn’t make sense to me. In the rest of the world, electric cars cost more: batteries and new tech are expensive. However, the economics of car pricing in Bermuda is vastly different because of the very high duty rate on importation.
For traditional gas cars, it is 75 per cent of the first $10,000 of imported value and a whopping 150 per cent after that — for the record, I am fine with that. For electric cars, it’s zero. This is fantastic, the Government is doing a great thing here.
As of now, there is only one car in Bermuda that is sold in both a gas and electric version — the Kia Soul. Below are some numbers I threw together based on US retail prices for the Kia Soul on the assumption that our dealers pay about 75 per cent of that from the manufacturers. These are rough estimates and are undoubtedly inaccurate to some degree, but they still tell a story:
Gas ($) Electric ($)
US retail 19,800 33,950
Dealer cost 14,850 25,463
Bermuda duty 14,755 0
Shipping 4,000 4,000
Landed cost 33,625 29,463
Bermuda retail 39,500 45,000
Profit 5,875 15,538
Now, we have a free economy and there are no rules about profit margins allowed to retailers, but in this instance, these numbers illuminate a big problem. We need to ask why the Government has chosen not to levy duty on electric cars. Is it to promote the adoption of an environmentally friendly technology or is it to allow dealers to make more money?
Obviously, my question is rhetorical. There are, of course, other factors at play. Dealers will not earn nearly as much money on continuing maintenance on electric vehicles, for example, but to this I say “boohoo”. This is a common issue for dealers worldwide and thus should not be taken into account.
My rough example deserves a deeper dive. It is simply not right that Bermuda Motors profits almost triple by my numbers. I would love to buy an electric car but I am not willing to give the saving that is intended in a lower duty rate over to the dealer in extra profits.
It would make sense that in the case of electric cars and other environmentally motivated duty discounts — LED lights, solar panels, etc — retailers be monitored for unfair practices.
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