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Written by: Sheena McGuinness

Sheena McGuinness

Partner

Could the new tax treatment for low emission vehicles unlock pent-up demand?

Earlier this month the National Infrastructure Commission released information on the Charge up Britain campaign, covering the infrastructure for the electrification of transport. Electric vehicles (EVs) are seen as playing an important part in creating a low carbon future for the country, which in view of the recently passed net zero emissions law makes them even more vital.

With costs falling, new models from manufacturers such as Porsche, Mini and Mercedes coming onto the market, and even James Bond rumoured to be driving one, the EV is fast becoming the coolest of cars to own.

However, Bond better hope the evil villains he is chasing avoid Oxford and Norwich, where, if his battery runs low he’d be heaving his car 6 to 10 km to the nearest charging station. 

This illustrates the key problem, and one which Charge up Britain is both transparent on and cognisant of – there’s a huge disparity between local authorities and their car charging provision. Will Charge up Britain help to address the infrastructure problem in a comprehensive way?

The Mayor of London set out plans recently for London’s EV future to tackle the twin dangers of London’s toxic air crisis and the climate change emergency, assembling the world’s first EV taskforce comprising representatives from business, energy, infrastructure, government and the London boroughs. 

However, while the plan outlines how London is on track – what about the country as a whole? 

The National Infrastructure Assessment highlighted that of 145 urban areas in Britain with populations above 50,000, 52 were not served by a rapid charger.

It is all well and good claiming that costs of EVs are falling, with the likes of Robert Llewelyn et al exulting the praises of the significantly cheaper running costs for EVs compared to petrol and diesel cars. But, when the traditional fossil fuel cars are phased out and we no longer have the £28.4bn plus of fuel duty, something has to plug the gap. The Government will need to think of a way to make up that lost tax revenue and this in turn will likely impact the project economics for EV owners and investors.

Nonetheless, a recent study found that there is considerable interest in EVs as a 'next vehicle purchase'. Findings suggest that consumers are willing to spend more on EVs, especially considering the full cost of ownership, including fuel and maintenance savings. But, as noted above, are the cost calculations flawed and on the brink of change?

Finally, the changes to the tax treatment of low emission vehicles are thought by some to be impeding the uptake of EVs in the short term as businesses wait for the optimal time to buy an electric company car. From April 2020, tax savings on pure battery and efficient plug-in hybrid vehicles are set to increase dramatically.

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