EVs ‘doomed’ by tax move?

Renault Zoe and Vauxhall Ampera
18 Apr, 2012 9:00am Jon Morgan

Electric cars will be killed off by new company car tax rules, expert warns

The future of electric cars is doomed after the Government decided to make business users pay company car tax on low-CO2 vehicles from 2015/16. That’s the view of Mark Norman, researcher at trade expert CAP.

At present, owners running EVs as company cars don’t pay Benefit in Kind (BIK) tax, while low-emission hybrids like the Vauxhall Ampera sit in the five per cent company car tax band. From 2015, both will go into the 13 per cent band.

But Norman says the move will make electric cars not viable for business use, and prevent the kind of bulk sales that would allow makers to cut prices. Fleets bought 59 per cent of all EVs sold in 2011 and a huge 93 per cent of those sold so far this year, according to the Society of Motor Manufacturers and Traders.

But as we found out, EV makers are adamant demand will hold up. Andy Heiron, head of Renault’s UK EV programme, says electric cars still offer real financial benefits as fuel prices rise.

The end or not? Experts’ view

Mark Norman
Motor researcher, CAP

“Fleets just aren’t going to buy electric cars once exemption from BIK is lifted. By 2015/16 there will be no end of vehicles with sub-100g/km CO2 and lower prices. Why would people pay extra tax and compromise driving style?

“Unless manufacturers can get the prices of electric cars down, the future of these products looks bleak. Company car drivers aren’t likely to go for them and I can’t see there being many private buyers with £30k in their pocket to spend on a car that only does 100 miles before needing a charge.”

Andy Heiron
Head of Renault’s UK EV programme

“We don’t see it as a problem. There are still many financial reasons to run an electric car.

“At Renault, we’re aiming our electric products more towards private buyers than fleet buyers anyway. And our battery leasing scheme means list prices are competitive and BIK will be low.

“Electric cars’ low running costs are still a convincing argument, particularly with fuel prices so high. Compare prices now to how they were a few years ago and electric cars seem very attractive.”