Big efforts to drive more motorists into electric cars risk being thwarted by ‘inconsistent’ Government tax policies that perversely penalise motorists for going ‘green’, motor industry bosses have warned.
Charging road tax from April on electric vehicles that were previously exempt and a failure to provide sufficient charging points could put the brake on a wider take up of electric and other ‘alternative’ fuel vehicles by consumers, they fear.
The warning came as motor manufacturers created the largest ever display of 26 alternatively fuelled vehicles – including the Nissan LEAF, the BMW i8 electric supercar and Renault ZOE – to demonstrate the range and diversity of cars and vans available to UK consumers in a bid to stress that the industry was ‘doing its bit’.
Perverse penalties for EV buyes: New Government tax policies could lower the demand for electric- and plug-in hybrid cars in the future, industry bosses warned on Thursday
Some motor bosses say the Government is sending out ‘mixed messages’ by telling people to invest in cleaner cars – and then penalising them for doing so. Some have even spoken privately of their ‘frustration’.
The warning also also comes as ministers and politicians wage war on ‘dirty’ diesel cars – with the Mayor of London imposing extra charges on diesel powered cars which enter the congestion zone.
Car-makers themselves, represented by the Society of Motor Manufacturers and Traders, were guarded in their criticism but still warned that ‘VED from April will not be favourable to plug in vehicles’ and urged ministers to adopt a ‘consistent approach’ if consumers are to feel confident in switching to green vehicles’. It stressed ‘more must be done to boost buyer confidence.’
The industry representative’s own YouGov survey of 2,100 drivers in London revealed that the majority of consumers (85 per cent) were not aware of changes to the car-tax regime for new vehicles which come into force from April and which will penalise drivers of many ‘green’ cars.
SMMT chief executirve Mike Hawes (left) and transport minister John Hayes (right) stand among 26 alternative fuel vehicles you can currently buy in the UK
The SMMT said: ’Under the new system, two thirds (66%) of the alternatively-fuelled vehicles that currently qualify for the £0 standard rate will now be subject to an annual flat rate charge of £130, in addition to varying levels of first year tax.
‘Meanwhile, those with list prices above £40,000 – which will include some of these new technology vehicles – will also have to pay an annual £310 premium car surcharge’.
The SMMT’s survey concluded that more consumers would make the switch to electric, hybrid and other green vehicles if there are cost savings through purchase incentives and cheaper car tax.
SMMT chief exeuctive, Mike Hawes
Asked what would make them less likely to switch to an electric or other ‘green’ car, some 17 per cent cited poor tax incentives, 42 per cent complained there were no convenient charging points, 34 per cent thought the purchase price too high, and 26 per cent cited higher insurance costs.
By contrast, half (50 per cent) of all drivers said having cheaper or zero car tax would incentivise them to buy a green car, as would official discounts such as the government’s plug-in car grant (41 per cent), sufficient functioning charging points (48 per cent), exemption from city centre congestion charging (31 per cent), and low running costs (57 per cent).
But 17 per cent said ‘nothing’ would make them more likely to purchase an electric car.
Intriguingly, while 55 per cent of respondents said their next car was most likely to be powered by petrol, and 17 per cent cited an electric – hybrid or hydrogen fuel cell car – just one in 20 said it would be a diesel, which, at its peak, accounted for half of all new car sales.
SMMT chief executive Mike Hawes said: ‘Our own survey highlights the need for ongoing government support for this new market. 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.’
The Institute of the Motor Industry (IMI) was more outspoken about the restrictions facing low-emissions-vehicle take-up. Its chief executive Steve Nash said: ‘The Government is sending out mixed messages that are confusing consumers.
‘Ministers Say one thing, but do another. They want greater take up of green cars, but then perversely remove the zero road tax incentive for many of them.
‘They are short-circuiting their own policies and putting off potential green car buyers from going electric.’
From left to right:
Mr Nash added: ‘The public are similarly concerned with the lack of charging points available to service electric and hybrid cars.’
Commenting during the showcase of cars at London Bridge on Thursday, Hawes said: ‘Consumers are naturally wary when it comes to new technologies. So we need a consistent approach from government that gives confidence to consumers.
‘The Plug in car grant has been hugely influential but has been reduced recently and changes in VED from April will not be favourable to plug in vehicles .
‘The government wants to incentivise the take up of these new technologies so needs to ensure there is every reason for customers to invest in these new cars whether that be grants or tax benefits.’
He added: ‘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.’
Registrations of ‘green’ cars have trebled over the past five years and in January they recorded their highest ever market share at 4.2 per cent.
The UK is also currently the EU’s biggest market for plug-in electric cars with 36,917 registered in 2016.
But the SMMT noted that ‘growth has been rapid but market penetration still remains at a relatively low level considering around 2.7 million new cars were registered last year’.
Transport Minister, John Hayes defended the Government’s record on promoting ‘green’ vehicles on Thursday.
‘We are working with determination to get more people switching to low emission vehicles,’ he said.
‘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 £2billion 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.’