Aftermarket February 2023

10 AFTERMARKET FEBRUARY 2023 BIG ISSUE www.aftermarketonline.net need a framework that encourages consumers and businesses to buy electric vehicles. We look forward to working with government on how to transition the market and ensure the tax framework on road users supports this objective.” Head of Policy at the RAC Nicholas Lyes said: “After many years of paying no car tax at all, it’s probably fair the government gets owners of electric vehicles to start contributing to the upkeep of major roads from 2025. While vehicle excise duty rates are unlikely to be a defining reason for vehicle choice, we believe a first year zero-VED rate benefit should have been retained as a partial incentive. But we don’t expect this tax change to have much of an effect on dampening the demand for electric vehicles given the many other cost benefits of running one.” Nicholas added: "The fact that company car tax increases on EVs will be kept low should also keep giving fleets the confidence to go electric which is vital for increasing the overall number of EVs on our roads.” Switch According to Paul Daly, Partner at accountancy Group UHY Hacker Young, putting VED on EVs poses the risk of deterring carbuyers from making the electric connection: “It’s going to be increasingly difficult to get people to switch to electric cars if they are more expensive to buy than petrol or diesel cars and no cheaper to run. Saving several hundred pounds a year in Road Tax is a meaningful incentive to switch to electric. Once that’s gone an electric car is less appealing to many. Along with the phasing out of grants, the sky-high price of electricity and the costs of finance as interest rates rise, the money involved in having an electric car has become a real problem for a lot of households. If the government is serious about net zero the EV market will require more support than this.” The application of VED may not be the only additional cost EV buyers face however. As founder of ChooseMyCar.com Nick Zapolski noted the Autumn Statement also removed the exemption EVs held from the £335 premium supplement on new cars. As a result, an EV worth £40,000 or more could cost its owner £520 for the road tax, even though it is the zero-emission option. He said: “While our research suggests people are interested in EV ownership, it’s undeniable that the high purchase price of new EVs - and the lack of second-hand ones on the market - mean it’s out of reach for many drivers. Any new tax on them will just exacerbate this situation – and could be seen as an indication that other benefits of EV ownership are under threat. This new ‘Tesla tax’ means that some people will now be paying more for their road tax than someone in an old banger, which is not in line with the government’s green credentials. While we appreciate that the higher amount of EV drivers means a drop in road tax, this seems a huge step up and is a concerning sign as to what may lay ahead.” Incentives As far as CEO at car leasing comparison website LeaseLoco John Wilmot is concerned, the Chancellor made the wrong decision: “This is another kick in the teeth for electric car owners and sends out completely the wrong message. The government has ambitious Net Zero targets to meet, and putting more roadblocks in the way of people early switching to electric vehicles is not the way to hit those targets. Plug-in grants have gone, soaring electricity prices have hiked charging costs and now for the first time EV owners will pay Vehicle Excise Duty. This decision could put the transition to electric cars back years. Where are the incentives now for car owners to early switch to an EV?” He added: “This is an ill-thought out and ill-judged decision and could have massive repercussions for UK’s Net Zero ambitions.” Ian McVicar, Senior Director – Consulting Lead for Manufacturing,