Since 2011, the UK government has been offering a taxpayer-funded rebate on the sale of battery electric vehicles. Known as the Vehicle Bonus, it is designed to help convince motorists to switch from diesel or petrol and stick to electric driving.
But in June 2022, the scholarship canceled with immediate effect. It wasn’t entirely a surprise, given that the amount buyers were able to claim back had been gradually reduced. £5,000 to £1,500, or it was only recently available for new vehicles costing less than £32,000 (the average electric car costs about £43,000 circa R1 023 000).
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Volvo XC40 P6 recharge plugged in and charging.
In fact, the government has been trying to eliminate the scholarship entirely for a while. only a Big backlash A couple of years ago it forced the government to make a quick turn on the handbrake and keep it going for much longer.
Despite this, the rising level of demand for electric vehicles appears to have given the Treasury the green light to pull the plug once and for all. Instead, it seems to chooseA shift in focusTowards charging infrastructure, although no new funds have been announced for this.
the government argument To cancel the subsidy is that it has already done its job of turning the wheels of the electric vehicle market. There are also significant financial benefits to owning an electric vehicle, such as lower operating costs and no road tax bill.
It is true that the market for electric cars is growing. Prices have fallen, the range of models has improved, and this is appreciated One in four cars Sold in the UK and EU this year can be battery operated.
But this could change quickly. Other countries that have withdrawn subsidies for car buyers have seen a decline in demand for electric cars.
For now, the government is basically saying it will shift towards subsidizing charging infrastructure and Company car buyers.
At first glance, targeting the purchase of company cars makes sense. Lots of companies buy new cars, and their drivers tend to get more miles than private owners. So if they can be encouraged to buy electric cars, it will help reduce carbon dioxide emissions on the roads.
After two or three years, these company’s cars are introduced to the used car market, which could lead to an increase in the number of electric cars available.
But it raises a big question about fairness. Company car support provides savings to business owners and employees who would benefit from a company car Tax exemptions. Choosing an electric vehicle is becoming an increasingly obvious choice for managers and business owners, with a tax system designed to help them.
So far, so good – for the relatively wealthy. In affluent parts of the UK, shiny new Teslas, Polestars and e-Trons plugged into the local electricity supply are a common sight on the driveways.
Some charging stations offer much faster charging times than others.
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In poor areas, they are less common, as are trails. But those with their own home charging point enjoy much cheaper rates because hooking up to a charging point on the street means paying 20% VAT on electricity instead of the 5% local tariff.
So while targeting the company’s cars and fleet drivers makes sense in promoting a broader uptake of electric vehicles, the policy seems somewhat regressive. The government seems to have forgotten to help the less affluent use electric cars.
In contrast, New Zealand recently declared “clean car upgrade program“which aims to help low- and middle-income families with low-emission cars through an efficient scrap and replacement scheme. In Scotland, Plan Offers interest-free loans to anyone looking to purchase a new or used electric vehicle. It will be interesting to see if these ideas have the desired effect.
Meanwhile, the global auto industry is severely constrained by Shortage of chips. In the UK, it also finds itself under pressure from The shift in approachwhich now prefers the “stick” of economic mandates to the “carrot” of widely available grants.
under Zero-emission vehicle mandateManufacturers will be required to sell a certain percentage of electric vehicles before 2030. If they do not reach the targets, they will be fined.
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Not surprisingly, the government’s recent moves have not I got off well With the auto industry struggling in a difficult economic climate. The government should not forget the economic challenges for drivers from high petrol prices and the high cost of living. If it wants more of them to switch to electric cars, it should focus more on making it An affordable option To the largest possible number of motorists.
David Baileyprofessor of business economics, University of Birmingham And Phil TomlinsonProfessor of Industrial Strategy, Deputy Director of the Center for Governance, Organization and Industrial Strategy (CGR & IS), Bath University
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