Bright Blue, the independent think tank for liberal conservatism, has today published a new report, entitled Driving uptake: maturing the market for battery electric vehicles, which proposes a mixture of new fiscal and regulatory policies to mature the market for battery electric vehicles (BEVs), both new and used.
The report unearths and explains the key barriers to maturing the BEV market in the UK, before assessing the types of policy interventions that have been and could be implemented to catalyse the market for BEVs in the UK, drawing on international examples.
The report calls for the UK Government to focus on increasing the uptake of both new and used BEVs, since those from less well-off households are more likely to purchase vehicles from the second-hand market.
Commenting Patrick Hall, Senior Researcher of Bright Blue and co-author of Driving uptake: maturing the market for battery electric vehicles, said:
“Whilst the UK Government has taken steps to grow the market for battery electric vehicles and their uptake has been trending in the right direction over the last decade, there remains a long way to go before the UK’s battery electric vehicle market is comparable to that of other high-performing countries. It is imperative that the market for battery electric vehicles – both new and used – grows substantially over the next decade if the UK is to meet its legal net zero 2050 emissions target.
“The common characteristics of an electric vehicle owner include being affluent, well-educated, middle-aged and male. It is important that less well-off households are not left behind in the electric transition, and as such, policies to bolster the second hand market are critical. Focussing on the used market for battery electric vehicles will achieve both better progressive and environmental outcomes.”
Responding to the report, a Department for Transport spokeswoman said:
“This Government is going further and faster than ever before to decarbonise transport and to end the UK’s contribution to climate change by 2050.
“One in ten cars sold in the UK in 2020 had a plug, and with record numbers of zero and low emission vehicles on the roads, our £2.8bn strategy is powering the electric transition to incentivise drivers and create a cleaner, greener transport system for all.”
George Freeman MP, former Minister of State at the Department for Transport, commented:
“The decarbonisation of transport is essential to achieving net zero: the automotive industry is now in a global race to switch to electric vehicles.
“If we want to retain our automotive industry we need to be as ambitious in our Future of Transport Industrial Strategy as we were in our groundbreaking Life Sciences Strategy. This is an important set of recommendations from Bright Blue”
Bright Blue’s main fiscal policy recommendations include:
- Front-load the value of the Plug-in Car Grant so it equals £5,000, increased from £3,000, from April 2021 and then gradually reduce its value in regular intervals before being phased out completely from October 2023. In practice, this sets a clear 30 month trajectory for the complete phase out of the Plug-in Car Grant. It encourages households and businesses to purchase new BEVs as soon as possible, as delay only continuously reduces the amount of government subsidy available to them. This would also support the saturation of the market to aid the second hand BEV market.
- Establish a Used Vehicle Plug-in Car Grant of at least £2,000 to support low income people into BEV ownership. To be eligible for the Used Vehicle Plug-in Car Grant, vehicles must have CO2 emissions of less than 50 grams per kilometre and a minimum zero emission driving range of 112 kilometres (70 miles), matching the eligibility criteria of the existing Plug-in Car Grant for new BEVs. In addition, vehicles must not cost more than £30,000 to prevent high-end luxury vehicles being subsidised. To be eligible for the Used Vehicle Plug-in Car Grant, vehicles could be purchased from a dealership to prevent subsidy fraud via private sales. In order to target the grant towards those whom it aims to support, only households or individuals which are considered low-income could be eligible for the grant. The Used Vehicle Plug-in Car Grant should be permanent for the foreseeable future.
- Enable enhanced capital allowances for businesses which purchase zero emission vehicles for the purpose of renting and leasing them. Businesses which purchase vehicles for the purpose of renting and leasing should be allowed to deduct the cost of the vehicle from business profits before tax in the first year, provided that the vehicle produces less than 50 grams of CO2 per kilometre and has a minimum zero emission driving range of 112 kilometres (70 miles). This allowance could automatically expire in five years, only renewed once an assessment has been made of its efficacy and necessity as the price of BEVs falls and their market penetration increases.
Bright Blue’s main regulatory policy recommendations include:
- Introduce a mandate immediately stating that all new vehicle purchases for the public fleet (central and local government) must be BEVs. Such a mandate would increase the proportion of BEVs in the central and local government fleet, and when it comes time to renew their fleets once more, these BEVs would trickle down into the nascent second hand BEV market.
- Introduce an obligation on all local authorities to install on-street electric vehicle chargepoints within three months when requested by residents unless there are reasonable grounds for objecting, facilitated by an online system established and administered by the local authority. BEV drivers should be able to access an online portal established and administered by local authorities for making their request. Drivers would be required to show proof of purchase of a BEV to their local authority, before making a request through the online portal for the installation of a chargepoint near their place of residence. The request could be assessed on various criteria, for example whether the driver has access to off-street parking, the walking distance to other existing or planned chargepoints in that area and the occupancy rate of nearby chargepoints. If the request is approved, the local authority would open a consultation period of six weeks, where stakeholders could challenge or propose amendments to the plan. Following this, and assuming no setbacks as a result of the consultation period, the chargepoint would then be published on a map and other nearby registered BEV drivers could be notified of its location before being installed. Local authorities could either own the chargepoints or tender out their ownership to a private organisation. The operation of the chargepoint could also be tendered out to a charging network.
- Make interoperability a condition for central and local government funding towards chargepoints. Unlike other countries, few cross-network agreements to facilitate interoperability exist in the UK. The UK Government provides significant amounts of funding for chargepoints through the CIIF, Rapid Charging Fund and to local authorities through the On-street Residential Chargepoint Scheme. By making central and local government funding for chargepoints conditional on the basis of providing interoperability, this would act as a catalyst for an increase in cross-network agreements and interoperability between charging networks. This would benefit chargepoint users by increasing the number of chargepoints that they could access using a single charging network subscription.
- Require all petrol stations above a certain size to have at least three rapid chargepoints by 2023, funded in part by the petroleum company that ultimately owns a petrol station and in part by government With a cost of between £20-40,000 per rapid chargepoint, petroleum companies – who ultimately own petrol stations, even in a franchise model – can and should be able to make a reasonable contribution to their installation. Petroleum companies that ultimately own each petrol station should be required to fund the installation of the chargepoints themselves in each relevant petrol station, whilst the UK Government could pay for the necessary grid connections through the existing Rapid Charging Fund.
- Make the inclusion of estimated lifetime costs mandatory for all used as well as new vehicle sales alongside the retail upfront price. For used vehicles being sold privately or through dealerships, the Vehicle Certification Agency (VCA) should establish an online tool to calculate vehicles’ running costs using vehicle information such as fuel tank and engine size, battery capacity, weight, average maintenance costs and taxation, as well as contemporary fuel and BEV charging prices. To make an easy comparison for consumers, the final figure should be displayed in pounds-per-100 miles. This VCA-accredited estimated figure must then be displayed along with the listed price of any vehicle for sale. This estimate could be provided for every model of every make of car.
