Government urged to incentivise firms to make smaller EVs

29 Jun 2022

The UK government should consider incentivising manufacturers to make smaller, lighter and cheaper electric vehicles in order to ensure that future machines are as sustainable and ethically produced as possible.

The proposal has been made by the Climate Change Committee (CCC), an independent body that advises the government on how to reduce emissions, as part of a large Progress Report on the UK’s net zero strategy.

In a 600-page Progress Report on the UK’s net zero strategy the CCC has made a number of recommendations in oder to reduce the environmental impact of the transport sector.

As well as recommendations on how the government should enforce its planned zero-emission vehicle (ZEV) mandate, it also calls for incentives to boost sales of second-hand ZEVs, more emphasis on expanding EV charging infrastructure – and the introduction of a new road pricing scheme for electric cars.

Here are some of the CCC’s key recommendations.

Promoting sustainable zero-emission vehicles

The government has already outlined plans to introduce a zero-emission vehicle mandate in 2024, which will require manufacturers to ensure a certain percentage of their fleet sales are ZEVs. 

The CCC says that the government needs to focus on how to deliver “an effective mandate” – and suggested that should include measures to ensure EVs are “produced based on sustainable and ethical supply chains and that the emissions embedded within EV production are reduced.”

It added those measures “could include incentivising the sale of smaller vehicles and introducing regulations requiring reusability and recyclability of batteries.”

Electric cars use more CO2 to produce than combustion engined cars – although they produce no tailpipe emissions when running – and there has been a trend, led by a mix of customer demand and the requirement to house large batteries, toward large SUVs in recent years.

The CCC wants this trend reversed. The Department for Transport is considering using the ZEV mandate to incentivise certain vehicle attributes, the CCC noted: “Improvements in these aspects, in particular vehicle size/weight, price point, battery recyclability, and supply chain sustainability, need to be incentivised and addressed, either through the mandate or separately.

Tackling the cost of electric vehicles

While the CCC report is broadly supportive of the recent decision to scrap the plug-in car grant, it does note that “the government must make sure that changes to grant support do not undermine its clear messaging in favour of the EV transition.”

The CCC wants the government to consider measures such as targeted support and taxation gradients to ensure “broad access to the benefits of EVs across society”. 

It highlights Scotland’s Low-Carbon Transport Loan as one measure that could be used to incentive the sale of used electric cars, and also suggests that targeted support for EV leasing could be considered.

Expanding charge point provision

The CCC also highlights the need to dramatically increase the UK’s charging network infrastructure. While it calls the DfT’s recent Electric Vehicle Charging Infrastructure Strategy a “credible delivery plan”, it does highlight that the commitment to a “market-driven approach” led by private-sector investment could worsen regional disparities in charge point provision.

It also notes that, while the government is “relying on competition” to close the price gap between home and public charging, “there is little evidence of this happening to date”.

It highlights the continued discrepancy in VAT rates, with domestic electricity charged at 5% VAT and electricity at public charge points at 20%.

A plan for road pricing

The CCC report notes that the government received £28 billion in fuel duty in 2019, and highlights that, combined with EVs being zero-rated for vehicle excise duty, threatens to leave “a significant hole in the public finances” unless replacement taxation schemes are introduced.

The CCC is the latest body to call for a road pricing scheme, in which cars are charged for each mile they drive – potentially with higher pricing on busy roads at peak times.

The report highlights this approach as not just filling a potential taxation hole, but says that without such a scheme EVs “can be expected to significantly increase congestion as the costs to drivers of each extra mile is lower”.

The CCC report wants the government to start considering options now, before drivers being to assume EVs will always be tax-free – and to avoid a perception that “EVs were tax-free when richer consumers could afford them, but will be taxed once they are available to the mass market”.

The CCC says a variety of approaches could be considered, from a flat per-mile system to schemes that introduce variable rates based on geographic location. It says that all types of scheme must allow for exemptions and allowance, and be introduced with input from consumers, so they aren’t seen as an attempt to penalise motorists. 

Limiting the growth of car traffic

While the CCC has made recommendations for electric vehicles, it insisted that they “must not be the sole focus”, and that action is needed to encourage people to shift to other forms of travel, such as public transport and active travel.

It suggests measures to encourage car sharing schemes, as well as steps to manage public transport costs and invest in infrastructure to encourage active travel. 
 

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