CEO Update

A sting in the tail for electric vehicle ownership

18 November 2022 #CEO Update

Attention was firmly on the Chancellor this week as he delivered the Autumn Statement, and whilst we welcome his plans to deliver economic stability and – hopefully – growth whilst addressing the hole in public finances, there was always going to be a cost to motorists. From 2025, therefore, electric car and van buyers – and owners – will start to pay VED. While neither surprising nor unreasonable in principle given all drivers should pay their fair share, the sting in the tail is that many will also be subject to the VED expensive car supplement, for models over £40,000 – which will unduly penalise buyers of unavoidably more expensive electric cars.

These type of taxes should support vehicle decarbonisation and net zero ambitions, yet this might threaten that transition. Zero Emission cars will still be subject to a much reduced first year rate but will then incur the standard VED rate like their petrol and diesel equivalents. Electric vans, meanwhile, will immediately be subject to the £290 standard VED rate that a conventionally fuelled van pays, given there is no graduated VED system for vans. There was relatively good news for business buyers, who have driven EV growth thus far, in that company car tax will remain at low rates, rising just 1% from 2025 until 2028 – providing some long-term certainty. However, with CCT rates for ICE vehicles capped from 2026, EVs will become comparatively less attractive.

With a ZEV mandate on the way for manufacturers, we need a fiscal framework that encourages EV adoption using every lever – from tax to incentives and, critically, investment in infrastructure to cater for all vehicle types – and we will continue our engagement with government on how to transition the market and ensure policy and fiscal measures support this objective.

Elsewhere, this week our latest data showed the new HGV market enjoying its best third quarter since 2017. Substantial growth between July and September more than offset a weak first half of the year, demonstrating the strength of demand and signs that some supply chain issues might finally be beginning to ease.

Meanwhile, bus and coach registrations recorded the year’s first quarter of decline, although with the first government ZEBRA funded orders now being placed, we expect to see the market improve in 2023. To meet decarbonisation targets and ensure all passengers can benefit from zero emission journeys, however, funding must reach all regions.

Lastly, in very sad news, the industry was devastated to hear of Sue Baker’s death after her battle with motor neurone disease. A respected journalist, former BBC Top Gear presenter and pioneer for women across the sector, she will be dearly missed. Sue was a good friend of SMMT, and we send our sincere condolences to her family and friends at this difficult time.

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