Will tax changes switch off electric growth?

Car Industry
Electric, hydrogen fuel cell and low emission vehicles

British motorists wanting to go green currently have some 83 different low-emission cars and vans to choose from – but they need more incentives to switch from petrol and diesel vehicles to electric alternatives.

Industry body the Society of Motor Manufacturers & Traders (SMMT) this week organised a photo-call of 26 of the alternatively-fuelled vehicles currently on sale in the UK – mostly hybrids and electric vehicles but also including hydrogen fuel-cell cars, and drawn from 16 different brands.

And the public display of the variety on offer comes just as looming changes to Vehicle Excise Duty (VED, commonly known as road tax) threaten to make such cars less attractive to potential buyers.

Sales of alternatively-fuelled cars have been growing at the greatest rate ever seen on the UK market – up 22.2 per cent in 2016. But the 88,919 such vehicles registered represented just 3.3 per cent (up from 2.8 per cent) of a market worth almost 2.7 million units. And of that almost 89,000 such vehicles, 36,917 were plug-in electric models – Britain is now the biggest market in the EU for such cars.

Low costs the attraction

The SMMT commissioned a YouGov survey to find out the reasons why motorists might be persuaded to switch to hybrid and electric cars. Low running costs topped the incentives, quoted by 51 per cent of the 2,100 people questioned. This was followed by cheap or zero road tax (46 per cent), while 36 per cent highlighted purchase incentives such as the Government’s plug-in car grant, that can cut around £4,500 from the purchase price of such vehicles.

From April, however, the new VED rates will badly affect the two largest incentives. Currently owners of virtually all low-emission vehicles pay no road tax at all, as the CO2 emissions of such vehicles are below 100g/km.

Nissan LEAF

The Nissan LEAF has led the growing interest in electric cars.

After 1st April 66 per cent of these vehicles will move into a regime where in addition to a road tax charge of varying rate on purchase, their owners will have to pay £140 per year thereafter. A few vehicles, costing more than £40,000, will also be subject to a £310 supplementary charge – every year for five years.

This is very concerning when the YouGov survey also revealed that currently, just 13 per cent of motorists would consider switching to ultra low-emission vehicles when buying their next car. And very few give the new tax rates as the reason – alarmingly the survey showed that some 68 per cent of respondents were not even aware such changes are on the way.

Fear of running out

Instead, the prime reason given still relates to the ‘range anxiety’ that has hung over electric vehicles since they were first launched. Some 48 per cent of respondents fear that they won’t find a place to charge their car before it runs out of power, and 43 per cent say they don’t have convenient charging locations near their home or place of work.

1702 Renault Zoe

Drivers still fear being stuck with a flat battery and no charge point.

These concerns endure despite many manufacturers offering free home wallbox installations with purchases, and the latest electric cars now having ranges between charges of around three times the average daily commute – the latest Renault ZOE for example can travel 180 miles before needing to be plugged in.

Other concerns included the possible price of battery replacement (46 per cent) and the higher purchase price of such cars (41 per cent) despite the Government incentives.

Government charged to act

Such doubts exist as concern over the pollution caused by car emissions, particularly diesels, grows, and the SMMT is insisting that the Government needs to get fully behind promoting the advantages of low-emission vehicles.

“Our survey highlights the need for ongoing government support for this new market,” says SMMT chief executive Mike Hawes.

“We want to encourage more people to switch to ultra low emission vehicles in meaningful numbers but more must be done to boost buyer confidence. A consistent approach to incentives – fiscal and otherwise – and, most importantly, greater investment in the charging network is essential if we are to grow this emerging market.”

The Government claims, however, that it is doing as much as it can to support the growth of alternatively fuelled vehicles. “We are working with determination to get more people switching to low emission vehicles,” says Transport Minister, John Hayes.

Our Vehicle Technology and Aviation Bill published this week, will make sure the right infrastructure – such as electric charge points and hydrogen refuelling stations – is in place for this growing market.

“We’ve committed more than £2 billion since 2011 to increase electric vehicle uptake and support greener transport schemes. This includes £290 million, announced in the Autumn Statement, to support electric vehicles, low emission buses and taxis, and alternative fuels.”

Despite such promises many in the industry feel the post-April VED charges could stall any meaningful progress towards wider adoption of low-emission vehicles.


Latest versions of the Renault ZOE can travel 180 miles between charges.

Andrew Charman

Andrew is the News and Road Test Editor for The Car Expert. He is a member of the Guild of Motoring Writers, and has been testing and writing about new cars for more than 20 years. Today he is well known to senior personnel at the major car manufacturers and attends many new model launches each year.

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