Deaf Ear Likely for Fresh UK EV Support Call

Despite a major UK motorist organization adding its weight to calls for more EV financial support, the government is unlikely to want to manipulate the automotive sales market any further than it already does.

While the Automobile Association (AA) says 61% of 17,500 of its members have supported scrapping VAT, or purchase tax, to reduce the cost of EVs, the UK government is already under huge pressure over the passenger tax holiday just granted to the struggling domestic airline, Flybe. It is also unlikely to roll back on its strategy to force EV manufacturers to make the products more competitive against ICE alternatives witnessed by the scrapping of the PHEV grant to consumers.

Additionally, studies have revealed that the price point is just one of the major obstacles to persuading EV take-up with a trial early last year revealing a huge reluctance among drivers who have experienced a life dominated by range anxiety and a lack of infrastructure.

The costs to HMRC in lost tax revenues are also likely to be resisted. Using the Renault Zoe, one of the most popular electric vehicles in the UK, as an example would see its current retail price of £25,670 ($33,500) drop by 20% to £21,391 ($27,830). This would reduce the government’s tax revenue by £4,278 ($5,670) per vehicle at a time when an all-party Parliamentary committee has signaled a desire to reduce car ownership.

Meanwhile, a car financing company has pointed out that huge financial incentives to buy EVs has been in existence in the UK for more than three years. A study by Tusker reveals 60% of motorists are unaware that in 2016 the government introduced legislation which ensured salary sacrifice would be one of the most affordable ways to drive ultra-low emission vehicles (ULEV) and EVs. It ensured these would continue to be the most cost effective through salary sacrifice as they remained exempt from income tax and National Insurance. When coupled together with access to an existing EV grant, electric charging savings and the introduction of 0% Benefit in-Kind taxation from April 2020, salary sacrifice is now the cheapest way to drive electric.

It claims that for drivers, this represents an average saving of £220 ($286) per month from 2019 to 2020 when compared with retail deals, on top of the savings they are able to receive through salary sacrifice, amounting on average to £100 ($130) per month saving. Tusker CEO, Paul Gilshan, said: “For too long, a lot of people have felt priced out of the EV revolution. Salary sacrifice is nothing new but appears to be still an unknown to a lot of working people; it’s the solution to drive a new electric vehicle for both 20% and 40% taxpayers but it seems the myth is that people think they can’t drive an EV unless they are on high salaries.”

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