Government turns on diesel Tax increase looms
UK wants to tax new diesels to fund air quality plans and go all-electrified from 2040
The government will increase taxes on new diesel cars to fund its air quality plans, it announced last week. These funds will be dished out to local authorities to implement more local air quality measures, such as the proposed abolishment of speed humps and other trafficcalming measures that are detrimental to air quality.
The report stated: “Measures to improve air quality will be funded through changes to the tax treatment for new diesel vehicles, or through reprioritisation within existing departmental budgets.”
The Department for Environment, Food and Rural Affairs could not tell Autocar what changes will be implemented but confirmed there will be more details later this year, likely in the autumn budget statement.
The AA told Autocar the move shows that “cars are always blamed, without a grand strategy for the other sources which make up the majority of air pollution”.
It added: “One of the reasons people went to diesels is that they’re cheaper in the long run. The lack of affordable housing in city centres means longer commutes, which means a diesel car will be more suited to your commute. The average fuel consumption for new cars is 52.1mpg for petrol, 61.7mpg for diesel. Go figure.”
The AA also said it expects a revision of the current VED (road tax) system rather than an entirely new scheme.
Although the diesel tax changes will affect consumers more immediately, the headline-grabbing news from the £2.7 billion plan is the government’s intention to ban the sale of all new petrol and diesel cars and vans from 2040. This means only electric and hybrid cars and vans will be available to buy from that time. But it is still unclear what the government’s definition of ‘hybrid’ is under these plans.
In reaction, the Society of Motor Manufacturers and Traders CEO Mike Hawes cautioned that the automotive sector could be “undermined” if the industry isn’t given enough time to adapt to the new policy.
“Much depends on the cost of these new technologies and how willing consumers are to adopt battery, plug-in hybrid and hydrogen cars,” said Hawes. “Currently, demand for alternatively fuelled vehicles is growing but still at a very low level as consumers have concern over affordability, range and charging points.”
This year, about 4% of new car sales have been plug-in hybrids or fully electric, with about a quarter of those pure electric. Current predictions by charging point firm Chargemaster suggest the first one million plug-in hybrid or electric cars will be on the road by 2022, by which point sales of electrified cars will account for about 10% of all new car sales.
The automotive industry’s reactions have echoed Hawes’ comments, with many wanting more details from the government about how it will support this measure.
Andy Palmer, boss of Aston Martin, said the new legislation won’t have any affect on future trends. “In 2040, there won’t be a pure-combustion car, because hybridisation and plug-in hybridisation will be there with room to spare,” he said. “I genuinely believe plugin hybrids will represent 40% of the mix even by 2030, so this 2040 ban would be late.”
Mike Flewitt, CEO of
Mclaren, said he is confident his company will continue to make “thrilling” cars “while meeting all environmental and legal challenges”. However, he added: “We look forward to learning more about how the government intends to provide the necessary infrastructure to support and encourage electrification.”
Paul Mcnamara, technical boss of Williams Advanced Engineering, which is developing the battery for Aston Martin’s forthcoming
Rapide, described the announcement as positive, saying “it drives the industry forward with a very clear date”.
Mcnamara highlighted challenges such as the absence of any cell manufacturers in the UK. He said: “We need to see a transition plan and we will have to work hard to make sure we transition jobs in engine plants to jobs in motor and battery plants. The government has a role to play to encourage the battery industry.”