Sector experts have told Utility Week they support the AA’s plea to government to remove VAT from the price of an electric vehicle (EV).
It follows the publication of a poll of AA members, which found 60 per cent would be more likely to make the switch from petrol or diesel if the tax was cut.
The organisation has also called for the removal of premium Vehicle Excise Duty (VED) rate applied to EVs with a list price in excess of £40,000.
The AA’s poll of 17,500 of its members found that 40 per cent also believe the sales tax should be removed from leasing prices.
More than a quarter (28 per cent) of low-income households said removing VAT from the purchase price would be “very influential” in helping them switch to EVs.
Breaking down the results, the AA pointed out that 74 per cent of those aged 18-24 said scrapping VAT would encourage them to switch to EVs, compared to 59 per cent of those over-65.
The poll also showed that those in London were most keen to take advantage of such a scheme (67 per cent) and those in the North East least likely (56 per cent).
More than half (51 per cent) would like to see a scrappage scheme introduced to further encourage take-up of EVs.
Edmund King, AA president, said: “The UK car parc needs a shock to the system. Eight out of 10 drivers say improving air quality is important to them, but they are confused by current policies and as such many have stuck with older, more polluting cars.
“With EVs making up just 0.2 per cent of the nation’s cars, there is a long way to go to meet the official target of at least half new car sales to be ultra-low emission by 2030. Our proposal would help to achieve that goal more quickly.”
Charlie Cook, the founder of RightCharge and former head of smart projects at Octopus Energy, told Utility Week that similar tax relief in places like Norway have had a considerable impact on EV take-up.
He added: “The benefits of EVs are clear to a lot of drivers and when total costs are compared people can see the benefit. But, the upfront costs are still really important and anything that can be done to resolve that is bound to help the situation.”
Tom Pakenham, director of EVs at OVO Energy, told Utility Week: “Introducing zero VAT for EVs could be an impactful part of a package of policies to increase the supply and uptake of EVs, as we have seen in other markets around the world. Electric cars will play a critical role in increasing the amount of renewables on the grid, so policies such as VAT reduction should also be accompanied by the introduction of effective market signals to reward customers for allowing their electric cars to be used as a source of flexibility”.
Mark Lashbrook, technical manager for innovation at M&I Materials, owner of electric vehicle coolant specialist MIVOLT, said: “We need to acknowledge there are a number of barriers to EV uptake – while cost is important, as highlighted by the AA’s findings, it isn’t the only concern for drivers. Range anxiety is frequently mentioned by consumers as a reason not to get behind the wheel of an EV.
“The UK continues to deploy public charge points, but these tend to be slower recharging options, which change our relationship with service stations as we can no longer drive up, refuel and drive away in the space of a ten minute window.
“Our vision for the future is to have the service station of tomorrow similar to today’s so you can refuel quickly.
“The government needs to consider all options to increase EV uptake, not just cost reductions for the consumer as we need the infrastructure to support deployment.”
In other EV news, Octopus has partnered with EO Charging to launch an all-in-one home charging bundle. It brings together EO Mini Smart Home – an EV charger the size of an A5 piece of paper – with Octopus Energy’s EV energy tariff, Octopus Go.