Fleet software specialist FleetCheck has warned that an increase in electric vehicle (EV) Vehicle Excise Duty (VED) in the Budget could risk slowing fleet electrification.
The company warned that preferential tax treatment has proven to be the primary motivator of electric company car adoption and that any changes could risk hampering adoption.
Peter Golding, CEO at FleetCheck, said: “There is widespread reporting that Rachel Reeves is examining ways to plug the revenue loss from fuel duty that EVs represent to the Treasury.
“Some of the stories appear to be relatively outlandish, such as the introduction of a pence per mile charge for EVs, but there remains the possibility that there could be a substantial increase in VED and that would be bad news for electrification.
“Last year, the changes in VED made for EVs at the Budget added almost £2,500 to their running costs over a five-year period.
“That was a big shift and any further increases this year should be incremental rather than dramatic.
“While benefit in kind rates for EVs remain favourable compared to internal combustion (ICE) and plug-in hybrid (PHEV) until near the end of the decade, they are now starting to rise relatively quickly and, were VED to increase dramatically again, it will start to noticeably reduce the overall incentive.
“In the absence of any decisive tax gain, electric vans have failed to generate anywhere near the same kind of momentum as cars.
“It’s certainly possible that increasing taxes such as VED on the latter could slow adoption in the coming years.”
Some reports have suggested that the Government could offset any increases in EV VED by increasing the Electric Car Grant.
Golding said: “Our view here is that the grant is really aimed at the retail market and appears to have been relatively successful in stimulating interest there.
“With most fleets choosing to lease EVs, and the majority of vehicles only being awarded the lower £1,500 level, the difference made to monthly contract hire rates has been minimal.”
