ELECTRIC CAR DEMAND SINKS AS DRIVERS FACE PAY-PER-MILE TAX
Demand for electric cars has stalled as Rachel Reeves prepares to hit them with a new pay-per-mile tax.
Electric vehicle (EV) sales grew at their slowest rate in two years in November, at just 3.6pc, according to figures from the Society of Motor Manufacturers and Traders (SMMT).
Mike Hawes, the chief executive of the SMMT, tied the slowdown to the Budget and its long build-up.
He said: “Even in a fragile market, zero-emission vehicle uptake continues to rise, which is exactly what we need. But the weakest growth for almost two years – ahead of the Government announcing a new tax on EVs – should be seen as a wake-up call that a sustained increase in demand for EVs cannot be taken for granted.
“We should be taking every opportunity to encourage drivers to make the switch, not punishing them for doing so, else the ambitions of Government and industry will be thwarted.”
The Chancellor announced a new pay-per-mile road tax for EVs in last week’s Budget. The levy will charge drivers of electric cars 3p per mile when it comes into force in April 2028 – costing them around £250 a year on average.
News of the policy was first revealed by The Telegraph on Nov 6.
The change is meant to make up for lost fuel duty and to start bringing EVs into line with petrol and diesel vehicles. A typical petrol car driver currently pays around £600 per year in fuel duty, which is effectively a tax on distance travelled.
However, the car industry has warned that the new tax risks damaging demand for EVs, which are more expensive to buy than petrol alternatives.
The number of EVs sold climbed to 39,965 in November. Fully electric cars made up 26.4pc of all new car sales in November, up from 25.1pc a year ago. The SMMT said the recently introduced electric car grants supported sales.
However, the proportion of EV sales still falls short of the 28pc annual target. Carmakers who fail to meet this level risk fines.
The broader new car market reported a drop in sales last month. New registrations fell by 1.6pc in November to 151,154 vehicles.
The Chancellor’s latest tax raid on battery-powered cars is another blow for EV owners, after the Government announced that, from April, charge point operators will have to pay business rates of 49.9pc on the value of the parking bays where they install chargers.
The change is being introduced by the Valuation Office Authority, which did not previously consider them rateable for the tax.
Applying business rates to EV parking bays could raise around £25m a year, although the industry believes the actual sum could be four times that and add £300 to annual charging bills for heavy users.
The Treasury was contacted for comment.
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