In response to Prime Minister Rishi Sunak’s net zero statement on Wednesday, Baroness Parminter, Chair of the House of Lords Environment and Climate Change Committee, has written to Mark Harper MP, Secretary of State for the Department of Transport.
|In the letter, Baroness Parminter, on behalf of the cross-party committee looking into the ev sector, has asked the following questions relating to the decision to push back the phase-out date for the sale of new petrol and diesel vehicles from 2030 to 2035:|
1. How will the recent decision to delay the ban on the sale of new petrol and diesel vehicles from 2030 to 2035 impact the UK’s ability to meet the overarching target of achieving net zero by 2050?
2. What plans does the Government have to introduce a ZEV mandate in the light of its decision to delay the ban on sales of new petrol and diesel cars from 2030 to 2035?
The Government said that despite the push-back on Wednesday to banning pure petrol and diesel cars to 2035 it still intends to penalise car makers from January 2024 if they do not lift ev sales to about a fifth of their total registrations when they would have to pay about £15,000 for every additional car under the threshold.
From April 2025 there will also be VED to pay on electric vehicles which are currently free of the duty.
The PM’s announcement this week combined with the mandated penalty on manufacturers in just over three months time will put pressure on dealers and makers to reduce ev prices to shift stock they have aleady had difficulty selling due to prices, network shortcomings and charging issues, as well as higher insurance costs.
This week, some big dealership bosses expressed doubts that a ban will ever come in before 2050 if at all due to issues surrounding evs costs and range. There will have to be big incentives to move evs, such as VAT holidays, building thousands of public charging points in deprived areas and increasing the capacity of the National Grid to cope.
Motor manufacturers have invested billions of pounds and dollars in converting their operations to build electric cars and commercial vehicles and some have condemned the statement while others said it was reasonable in the circumstances.
Tata will build a massive traction battery plant outside Bridgewater and MINI has decided to build its next generation of small cars in Oxford while Nissan and Stellantis have also comitted to their UK plants at Sunderland and Ellesmere Port and Luton.
Toyota has a car plant near Derby and and engine plant making hybrid compatible petrol engines at Deeside and these will continue. Latest UK registrations from the Society of Motor Manufacturers and Traders are above.
Businesses which have also gone along with the 2030 timeline have also expressed annoyance and makers of hydrogen power systems will struggle to make their money if there is a signficant delay.
The Government has been losing enormous sums in fuel duty and VAT not being received on lower petrol and diesel fuel sales and they may try to make this up through the EV Excise duty take from 2025 or for a quicker return really ramp up the duty and VAT on fossil fuels which might also encourage vehicle users to switch to evs as their next purchase.
The next Autumn Statement on 22 November might give an indication of the Treasury’s approach towards the problems.