Electric sales are ever increasing, not just in the UK but across mainland Europe, too. The switch is being facilitated by a patchwork of incentives offered by countries to minimise the price hike compared with combustion-engined cars.
However, we’re now at the point where countries including the UK are thinking the market has become self-supporting, allowing them to slow or stop the financial help.
The process is likened by Matthias Schmidt, analyst and author of the European Electric Car Study, to parents working out exactly when to take the stabilisers off the bike. “That moment appears to be arriving in some northern European markets,” he wrote in his latest report. The question is: are we going to see a wobble in EV uptake?
The UK government noted the EV market’s health when it removed the final remaining EV purchase incentive, worth £1500 in its death throes, last month. EV sales reached a 16% share of the new car total in June, outpacing that of diesel, according to figures from the SMMT. Meanwhile, across Europe, electric sales reached 10% of passenger cars in the first quarter of the year, according to European automotive lobby group ACEA.
In the UK, the loss of the purchase incentive is unlikely to make a big dent. The bigger motivator for sales is still the low company car tax, which is currently just 2% of purchase price and stays that way until March 2025. Expect a change of heart from that point on.
The problem for private and business EV buyers alike is working out when they’re going to pay the equivalent of fuel duty. In June, the government-funded Climate Change Committee published a report calling for the government to apply an electric inclusive replacement for fuel duty by as early as the first quarter of 2023. Fuel duty netted the government £21 billion in 2021, with over half coming from petrol and diesel sales. In 2019, it was £28 billion.
The introduction of “some form of road pricing” should be done sooner rather than later, the CCC urged. “Drivers could begin to assume that EV driving will always be tax-free,” the committee warned in its report.
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