UK EV incentives and support: Progressive thinking by conservative government

First of a short series of articles by Bryce Gaton on how the EV transition is both progressing and being supported in other countries.

When it comes to supporting and encouraging the transition to low and zero-emissions transport, Australia lags well behind most comparable economies.

This situation is, sadly, easily maintained by our political class due to our geographic (and currently travel) isolation.

The result is that to most Australians, our position on EVs as compared to the rest of the world is something of an ‘unknown unknown’; by which I mean the ‘average Australian’ has no idea of how far behind we are in EV adoption, support or even up-to-date knowledge of EV capacities – so can’t compare or mark-down their local politicians on the topic or see the need to lobby them for change.

The UK is a particular case-in-point. In government since 2010, the UK Conservatives are arguably a more right-wing party than our own Liberal government.

However, the first and biggest difference is that – unlike here – there is effectively bipartisan support for action on climate change and EV policies.

In fact, their first EV grant scheme began in 2009 under a Labour government and has been continually developed and extended since by the Conservatives who took office in 2010.

So let’s take a look at how the UK treats low to zero tailpipe emission vehicles. First-up, there are eight categories of low and zero-emissions vehicles eligible for government grants. These are:

1. Cars (maximum of £1,500/price cap of £32,000 on the road),
2. wheelchair accessible vehicles (maximum of £2,500),
3. motorcycles (maximum of £150/price cap of £10,000 on the road),
4. mopeds (maximum of £150/price cap of £10,000 on the road),
5. small vans (maximum of £2,500),
6. large vans (maximum of £5000/maximum of 1000 applications per business per year),
7. taxis (maximum of £7000),
8. and trucks:
   • small: (maximum of £16,000/limited number of grants available)
   • large: (maximum of £25,000/limited number of grants available)

It is also worth pointing out that these grants have been evolving alongside EV technology and price developments.

For instance, as EV prices have gradually fallen, the grants for cars have decreased in both amount and maximum price eligibility. Initially set at up to £5,000 in 2009 (then worth around $A9,000) , they decreased to £4,500 around 2015 and a list price cap of £60,000 was introduced. The grant was again reduced in 2018 to £3,500, in 2020 to £3000 and now to £1,500 with a price cap of £32,000.

An additional benefit to UK buyers of zero tailpipe emission vehicles is their green number plate scheme. Designed to raise awareness of cleaner vehicles on the road, they also allow easy identification for preferential treatment.

These advantages include allowing them to drive in bus lanes, use special parking spaces, or access areas barred to more polluting alternatives (such as the Ultra Low Emission Zone in central London).

The UK also offers tax advantages for buying low to zero-emissions vehicles. These include:

• Ownership tax: Every pure electric vehicle costing less than £40,000 is exempt from the VED (annual road tax).
• Company cars: companies that buy fully electric cars can write down 100% of the purchase value against their profits before tax. They are also eligible for significantly reduced company car taxes (0% in 2020/21, 1% in 2021/22 and 2% in 2022/23). In addition, plug-in EVs emitting less than 50g/km of CO2 at the tailpipe had their company car tax set at 16% in 2020, which is 4-8% lower than the tax on fossil-fuelled company vehicles. The English equivalent of our Fringe Benefits Tax on the personal use of company cars is also zero for zero tailpipe emission vehicles.

The UK government is also spending significant amounts to support the building of EV charging networks, as well as offering grants to install home and workplace charging. Local authorities can take advantage of an On-Street Residential Charge point Scheme (ORCS) that reimburses 75% of the capital costs of buying and installing on-street EV charge points in residential zones.

In addition, the UK has just enacted legislation that requires the provision of cabling and switchboard capacity for EV charging in all new and substantially renovated buildings.

Overseeing all of this is the Office for Zero-Emission Vehicles (OZEV). OZEV is dedicated to the implementation of these grants and schemes, as well as promoting research programs, provide consulting services, encourage manufacturing opportunities and more.

Long-term EV Transition planning is done through the Transport Energy Model (TEM) run by the UK Department of Transport. With assistance from academia, industry, government, and environmental groups, its job is to assess energy consumption, greenhouse gas emissions and air pollution of a wide variety of technologies and road transport fuels over the period to 2050.

In addition, to provide certainty in the EV Transition – legislation has been passed there that requires the ending of new fossil-fuelled vehicle sales in the UK by 2030.

Looked at together, this framework provides a coordinated and wide-ranging set of plans designed to enable a smooth and just EV transition. The system also ensures that the UK’s transition plans can adapt to local and regional needs and vary as and when changes occur in technology or speed of adoption, yet remain generally in agreement with the general policy objectives of eliminating pollution and reaching net zero greenhouse emissions targets.

The result is a UK vehicle market where in 2021 full battery electric vehicles sales overtook diesel ones and took 11.5% total market share for the year ending 2021. In addition, they took a whopping 25.5% market share in December – auguring well for a further explosion in sales for 2022.

In the next of this series, I will look at a very different (but arguably even more effective) model for supporting the EV transition: Norway.