Tech vs tax
We like driving cleaner cars – so long as they don’t leave us out of pocket
Green car sales are growing globally – but financial incentives are proving to be a bigger factor than any number of powertrain improvements.
In June this year UK sales of electrified vehicles went down for the first time in two years. If that seems odd at a time when there’s a bigger and better choice of full electric vehicles and hybrids than ever before, you’re looking in the wrong place. The trigger was pulled last November, when the UK government changed its system of grants for green cars. Hybrids lost the £2500 discount most had qualified for, while electric cars are now helped to the tune of £3500 rather than £4500.
It took a few months to work its way through the system, but when it hit it hit hard: plug-in hybrids down 50.4 per cent, non plug-in hybrids down 4.7 per cent. There were complicating factors, including months of uncertainty in the fleet world about benefit-in-kind rates (now resolved, with zero BiK tax on electric cars in 2020-21), and erratic supply of some hybrids, a knock-on e ect of last year’s introduction of WLTP testing.
The UK experience is further evidence of the direct link between tax and electrified car sales. The clearest positive example is Norway: when it decided to make serious reductions to its carbon emissions, tax breaks for green car buyers were top of the list. EVs are exempt from road tax, registration tax and import taxes. They also get half-price tolls and parking.
Result: Norway, population 5.2 million, is the 10th biggest market in the world for electrified cars. In 2018 its biggest selling car of any type was the Tesla Model 3.
International Council on Clean Transportation Europe research shows that between 2025 and 2030 the need for tax incentives will dwindle as EV list prices reach parity with ICE equivalents, as battery prices continue to fall and higher sales create economies of scale.
Right tech, right car, right place,
right time