Electric vehicle market to lose “foothold” following budget change

22nd March 2012

Plans for a change to company car taxation could see the UK electric vehicle (EV) market lose the important "foothold" it had in the consumer market.

That is according to Dr Ben Lane, the managing editor of Next Green Car who warned that the industry may be "killed off before it's even started" as a result of the changes.

With fleet purchases accounting for the majority of the UK's first 1,000 electric car and van sales, business and company car taxation plays a crucial role in supporting the development of the EV market.

However, the chancellor's decision to end the five-year tax exemption for zero carbon and ultra-low carbon emission vehicles has provided a damaging blow to the industry,

It means that from April 2015, the company car tax rates for zero emission and ultra[-]low carbon vehicles will be set at 13 per cent, removing the key benefit of an EV purchase.

"Providing support using graduated Vehicle Excise Duty and company car tax is vital to ensure new technologies get a foothold in the market," Dr Lane said.

“While fiscal incentives should be time-limited, 2015 is far too early to expect EVs to compete with much lower priced petrol-hybrids and clean diesels."

The news of the change comes just weeks after Continental unveiled plans for the production of a new type of winter tyre designed specifically for electric cars.

Posted by Danielle Barge