EV Sales Growth Stunted By Cuts

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Despite the sales of battery electric vehicles hitting a milestone (500,000 low emission vehicles now on the UK roads), the grants for manufacturing have been cut by the government. But how will this affect the predicted rollout of electric vehicles?

With government plans to abolish the manufacturing of new petrol and diesel vehicles by 2030, it seems the cut to the BEV grant could affect the number of electric vehicles available. In March 2021, vehicle sales increased generally but dealers have seen a swing towards hybrids which comply with green air schemes, and appear to have come back into favour since the reduction in grants and the perpetual anxieties based around range for EVs.

It is estimated that “BEVs will account for 8.9 per cent of all registrations by year-end – down from the 9.3 per cent forecast in January. With PHEVs anticipated to take a 6.3 per cent market share, plug-in vehicles should comprise 15.2 per cent of all cars registered in 2021” (InsideEVs).

Could this impact leasing companies and consumers alike? The answer has to be yes. Some manufacturers are short of product, something which has not happened for years. That in turn affects the ability for leasing companies to source product.

Sustainability

Environmentally, these cuts could mean that petrol or hybrid vehicles will remain the first consumer choice. We will see the pace of reduction regarding carbon footprint starting to slow, too.

Legislative changes are struggling to keep pace. Many dealers have increased training needs as technicians move from combustion based training to that of high voltage EV.

Adoption of infrastructure

Less than 50% of UK businesses polled in Centrica Business Solutions’ research have adopted infrastructure for the move to EV, such as charging points. 46% of businesses plan to install these, while 37% already have.

The government should provide further grants and funding to businesses, and bring in legislation that will require such change, rather than the disparate local green air schemes that can be punitive for diesel commuters. Consumers need support both in terms of grants and the legislation to protect them when entering into finance or subscription agreements, which are now coming into sharp focus.

Together with countries such as Norway, the UK has a real opportunity to make cogent transformations to the towns and cities of the nation, with cleaner air and quieter roads. After the optimism delivered by the government whitepaper it is a false economy to reduce the grants and delay transformative legislation.

I’ll be following up on this topic in the weeks to come, given that our country’s economy is still in a process of levelling out from the pandemic. Will the government reverse the cuts to grants for EV vehicle development? In the meantime, if you’d like to discuss this subject or raise a general enquiry, please get in touch.

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Leasing electric vehicles: A smart option for fleets?

Bolstered by the government’s 10-point plan, electric vehicles (EVs) are becoming increasingly popular for both personal and business users. Read more about how electric vehicles are vying for first place in the new greener future.

However, for fleet managers considering switching, it can be difficult to know if now is the right time to make the leap. Leasing can simplify this decision, allowing fleets to try before they buy.

Why should we move to electric vehicles?

As well as tackling climate change and benefitting the health of the community, EVs also come with plenty of financial and commercial bonuses when compared to Internal Combustion Engine (ICE) vehicles. These include:

  • Increased energy efficiency
  • Lower maintenance costs
  • Lower fuel costs
  • Exemption from paying driving sub-charges, such as congestion charges
  • Government grants, such as the plug-in-grant
  • Tax breaks, including the zero percent benefit in kind (BIK) tax
  • Meeting the global demand for greener organisations

As the number of EVs on the market grows, they will only become more attractive to consumers and to fleets.

What are the problems with electric vehicles?

There are still some areas for EVs to improve on in order to truly match ICE vehicles. The most common issues are:

  • Less range and flexibility, leading to range anxiety
  • Lack of charging infrastructure
  • Higher price
  • Extra considerations when planning a journey, such as thinking where to charge the vehicle
  • Longer charging times when compared to conventional refuelling

However, these concerns are becoming obsolete as EV batteries become more efficient and capable of longer ranges. There’s also a growing charging infrastructure being built across the country, with a 36 percent increase from previous years. This is being accompanied by increasing financial support for the installation of charging spots in both private and commercial properties.

Can you lease an electric vehicle?

Leasing rather than buying an EV can provide a host of benefits to fleets, especially with so many leasing companies offering a variety of perks. Some advantages of leasing include:

  • Paying for usership of the car rather than the full price
  • Being able to update the car model more frequently, so companies can take advantage of innovation
  • Inclusion of charging infrastructure within the contract
  • Regular maintenance

Companies should focus on the shift to EVs as an investment for the long run, not as a financial burden. As with any major transformation, electrifying a fleet will involve the full commitment of the business and its employees.

The climate crisis is pressing, and more action is required from businesses. Reducing the number of ICE vehicles in fleets is a critical step in going carbon neutral and with the risks of choosing EVs quickly becoming obsolete, making the shift will undoubtedly be a worthwhile investment. Leasing can help facilitate the change, helping companies to assess their needs and adapt to a greener future, on a flexible basis.

Super-deduction tax break

In his spring Budget on 3 March 2021, the Chancellor announced the super-deduction that can be off set against tax liabilities.

From 1 April 2021 until 31 March 2023, businesses investing in qualifying new plant and machinery assets will be able to claim:

  • a 130% super-deduction capital allowance on qualifying plant and machinery investments
  • a 50% first-year allowance for qualifying special rate assets

The super-deduction, together with various funding instruments, may provide further impetus to the rate of change.

Contact us

If you’re considering making the switch to electric vehicles then we can support you throughout the entire process - from setting up the agreements, right through to recovering funds, if necessary. For further details or advice please contact Eddie Flanagan or Mark Bartholomew in our energy team.

If you would like to read more of our energy blogs and guides sign up to our mailing list to join our quarterly energy mailer.

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