Government supports early adopters of electric vehicles

(10/12/2009)

In the Pre-Budget Report, Chancellor Alistair Darling announced that he would be exempting electric cars from company car tax from April 2010 for five years, with electric vans also benefiting from van benefit charge exemption over the same period. He also announced the introduction of a 100% first-year allowance for companies purchasing electric vans, enabling them to offset the cost of buying one of these vehicles against their corporation tax bill in year one.

The British Vehicle Rental and Leasing Association has welcomed the announcement of further government support for early adopters of electric vehicles. The BVRLA will be working with HM Treasury to ensure that leasing firms supplying electric vans will be able to pass on the benefits of these allowances to the customer.

“We are really pleased that the Chancellor has listened to our call to modernise the business tax regime and give a clear, long-term incentive for companies willing to be early adopters of electric cars and vans,” said BVRLA chief executive, John Lewis.

“Together with the £2,500 - £5,000 incentive the government is planning to introduce from 2011 for people buying ultra-low carbon cars, these new measures will help speed-up the mass market adoption of sustainable road transport in Britain. We believe business users will be at the forefront, but all this depends on manufacturers swiftly coming to market with attractive, affordable, reliable and safe electric vehicles.”

Renault also welcomed Alistair Darling’s announcement. Renault UK Managing Director, Roland Bouchara, said: “Electric vehicles are already exempt from vehicle excise duty (VED), so this excellent news will undoubtedly assist in encouraging the British public and business community to adopt zero-emission (ZE) transport. We’re convinced that our exciting ‘Z.E.’ range, which is just 18 months away, will capture everyone’s imagination, so this latest financial incentive adds even greater weight to the case for electric transport, alongside its obvious environmental and running cost benefits. Today’s announcement should also help towards ensuring the swift development of an expansive electric vehicle charging infrastructure throughout the country.”

Renault’s push into the zero-emission electric vehicle arena begins in Europe in 2011, with the launch of the first three models from an initial four-model Z.E. family, designed to be affordable for everyone. The first of the electric trio will be a four-door Fluence saloon, followed by a Kangoo Van and latterly a city vehicle based on the eye-catching two-seat Twizy concept. A supermini will join the fold in early 2012.

SMMT chief executive, Paul Everitt said, “2010 is set to be another extremely difficult year for the UK motor industry as increased VAT and first year VED rates directly impact on consumer demand. The opportunity is to take advantage of the transition to low carbon vehicles, with new incentives for company car drivers and van buyers, as well as extra resources for collaborative research and development.”

However there was little good news for hauliers as the Chancellor ignored pleas to help the freight transport industry by abandoning the rise in fuel duty due for April 2010 or introducing some form of ‘essential user’ rebate.

With around 40% of the UK truck parc aged over eight years, the BVRLA believes that the Chancellor should have introduced some form of incentive scheme that would enable embattled truck operators to purchase and lease more environmentally friendly Euro IV or Euro V vehicles.

“Once again the Chancellor talks about encouraging road users to make the right transport choices, but gives no help or incentive to hauliers, who will play an essential role in helping the economy out of recession,” said John Lewis.

The BVRLA has also criticised the Chancellor for adopting an inconsistent strategy in his attempts to reduce road use.

“On the one hand the government is increasing fuel duty and fuel benefit charges in a bid to encourage people to consider greener motoring,” said John Lewis. “But it has ignored our calls to change the structure of the Approved Mileage Allowance Payment (AMAPs), so that the 4 million claimants are incentivised to use more fuel-efficient vehicles or alternative means of transport when undertaking business trips. This rate is too generous as it is and many organisations pay more, which actually encourages employees to drive extra miles to subsidise their wages.”

Related categories:  Hybrid and electric car   Renault   Vans