Britain bought the most alternatively fuelled cars in Europe last year, but the SMMT says new VED brackets could hinder growth
Sam Sheehan
23 February 2017

The UK’s role as Europe's biggest market for plug-in electric cars could be under threat when new VED brackets are introduced in April.

Britons bought 36,917 alternatively fuelled models last year, with the segment now representing 4.2% of the country’s overall registrations. But rising tax costs that’ll affect the majority of alternatively fuelled vehicles could deter potential buyers from opting for zero-emission models.

Strong UK car market growth spurred on by alternatively fuelled vehicles

The government’s new car tax brackets will move 66% of the available alternatively fuelled vehicles from road tax exemption to being subject to a £130 flat rate annual fee. A YouGov survey commissioned by the Society of Motor Manufacturers and Traders found that low running costs were the biggest draw for 51% of motorists, revealing how much of a hit the impending tax hike could have on demand for hybrids and EVs.

According to the survey, just 13% of British motorists are considering an alternatively fuelled car for their next vehicle.

To raise awareness of Britain’s leading position in electric cars and show support for low-emission transport, the UK automotive industry organised a display near London’s Tower Bridge, with 26 electric vehicles from 16 different brands featured.

Models ranged from the BMW i8 hybrid sports car to the two-seater Renault Twizy city car. The group represents less than one third of the available alternatively fuelled vehicles on sale in Britain, with the total currently amounting to 83 models.

SMMT chief executive Mike Hawes said: “Thanks to massive investment by vehicle manufacturers, British car buyers have never enjoyed so much choice and, as today’s display shows, that extends to every fuel type. However, our 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. 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.”

Transport minister John Hayes said: “We are working with determination to get more people switching to low emission vehicles. 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.”

Our Verdict

Renault Twizy

The Renault Twizy is surprisingly good fun with an endearing character, even though it has obvious flaws

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Comments
12

23 February 2017
How about doing doing some real journalism Sam and tell us who introduced these VED changes, "I'll help you with that one Sam" it was George Osborne. Why might he do that Sam ? Nothing to do with his own father being connected to the oil and gas industry by any chance which would prefer not to have the competition eh. Might explain this governments stance and introduction of new taxes for the solar industry as well as support for fracking despite overwhelming evidence of it's inherent dangers, not to mention undermining of the democratic decisions by councils who rejected the applications.

 Offence can only be taken not given- so give it back!

23 February 2017
The VED for EV's will remain 0 (unless they exceed a certain list price) wile everything else will go to £140 per year. So in many cases the incentive will be greater than it is now. I think it just exposes plug-in hybrids as a bit of a fudge, although a useful one in some cases.

23 February 2017
Exactly right - hybrids are not alternatively fuelled vehicles, simply petrol or diesel models with energy recovery. And there is already a pretty good incentive to buy them on account of their low fuel consumption. Perhaps what's wrong with the new system is that there is no longer any disincentive to buy fuel guzzler unless it also happens to be an expensive one (and if it is very expensive then buyers will not be bothered about having to pay a bit more for the road fund license).

23 February 2017
Most cars in the UK are bought by business, the rate of Capital Allowance is probably more important to business large and small, than the ved rate.If you buy a Gas Guzzler the Capital Allowance is probably 60% of the rate on a less polluting car, but do you drive round in a Nissan Leaf or my 140i, no contest, I just pay more tax.

23 February 2017
Anyone who thought that the system where most new cars had a tax liability of £0 to £80 per year was going to stay long term was deluding themslves. With the government having to borrow this year £55,000,000,000 they need tax income. If electric car sales ever increase to over 25% then expect their tax Tate to increase and tax in some form on the electricity used.

A34

23 February 2017
[quote=Campervan]Anyone who thought that the system where most new cars had a tax liability of £0 to £80 per year was going to stay long term was deluding themslves. With the government having to borrow this year £55,000,000,000 they need tax income. If electric car sales ever increase to over 25% then expect their tax Tate to increase and tax in some form on the electricity used.[/quote] Even EVs need roads to be maintained etc. Let alone plug-in hybrids - do we know how many owners bother to plug them in anyway? Owner-drivers maybe, but I have suspicions about fleet drivers!

23 February 2017
Good luck taxing the same power that goes into your toaster, or comes from your Solar cells. Eventually there'll be road charging or taxing EV's per mile, but till that day reap the rewards.

 

Hydrogen cars just went POP

23 February 2017
[quote=xxxx]Good luck taxing the same power that goes into your toaster, or comes from your Solar cells. Eventually there'll be road charging or taxing EV's per mile, but till that day reap the rewards.[/quote] It would be very easy to fit cars with a device to measure electric consumption that sends that information to HMRC that deducts the tax from your wages each month. If self driving cars ever came about information exchange between the car and authorities would be part of the deal as would speed control.

23 February 2017
This article is misleading. The new tax brackets favour EV's, but charge for Hybrids. The two should never be under the same category, so the new brackets are actually a good thing for EV's.

23 February 2017
The BEV tax bracket is zero, your article is very misleading. If your have a battery only car then you pay nothing. Surely it can't be that hard to understand. Hybrids and plug in hybrids pay, Battery electric vehicles do not.
Mjrich

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