"The recent announcement of a £37m government investment in the UK’s EV charging infrastructure is a major step forward in increasing consumer confidence."
DAVID REES, PA HEAD OF LOCAL GOVERNMENT SERVICES
There are many reasons why we should be seeing more and more electric vehicles (EVs) on UK roads. Drivers are facing rising petrol and diesel costs and these are only going to increase as world oil prices are predicted to increase by a 4.85% per annum.
Policy on reductions in emissions are driving higher taxation on fossil fuels and vehicle excise duty, and there is growing public concern for the environment. Equally, advances in technology are reducing the cost of ownership of EVs.
There is also political support at the highest levels with a number of policies in place such as the Department for Transport’s £30m matched funding ‘Plugged-in Places’ (PiP) programme. However, despite this supportive climate, EVs still remain a rarity.
So what is the problem? The main barriers to EV take up are well documented. There is much blog and column space dedicated to issues such as the lack of infrastructure, “range anxiety” (the industry’s term for drivers worrying about running out of power) and cost of ownership.
Some of these barriers are being addressed. The recent announcement of a £37m government investment in the UK’s EV charging infrastructure, drawn down from the £400m earmarked for low emission driving, is a major step forward in increasing consumer confidence.
Under the scheme EV drivers will have 75% of the costs associated with installing charging points both at home and public places, such as stations and principal roads, paid for by the government. This means that, in the future, EV drivers can be confident that, during most journeys, they will not be that far from a charging point.
However, there are still two further barriers to the adoption of EVs.
The first is the need to overcome range anxiety. A broader infrastructure will help mitigate this, but the recent funding announcement is only one element of the solution. There will also need to be developments in battery technology and future plans for EVs will need to take into account developments in hybrid and hydrogen-powered vehicles. These may be able to provide additional low carbon solutions and increased vehicle range.
The second barrier is cost of ownership. The purchase price of EVs could increase in the UK if the current grant arrangements are not extended beyond 2015 or met with an equal reduction in sales price. Equally, introducing a “benefit in kind” liability under the company car taxation regime will further increase the costs of low carbon vehicles and that will deter take up.
Research conducted by PA Consulting Group has provided some different insights into how to overcome these barriers either individually or together. One option is to think about how to increase the use of EVs but not necessarily the numbers of EVs owned. This could go some way to address concerns about costs for both vehicle purchase and on-going maintenance.
In the UK, this could include making public sector investment in EV sharing schemes similar to Paris’s Autolib programme or London’s ‘Boris Bikes’. It could also be supplemented by greater private sector investment in innovative and scalable mobility solutions such as traditional car sharing schemes like Zipcar and more radical approaches such as Peugeot’s Mu EV leasing service. However, these will need to be nurtured and supported energetically by policy makers if they are to become truly viable.
A second practical solution relates to incentives and how the UK could learn from European counterparts to inform its thinking. In Oslo, for example, in addition to EVs being exempt from car registration tax, VAT (at 25% in Norway) and annual car excise duty, EV drivers do not have to pay road tolls and also qualify for free parking and use of bus lanes in the city.
These additional incentives not only provide an estimated annual saving of around €2,000-€4,000 in motoring costs, but also can save commuters up to an hour every working day. This experience, evidenced by the fact that Norway has the highest level of EV market share (1.5%) in Europe, seems to suggest that users will be more willing to accept the cost and limitations of EVs if they can see other tangible benefits.
Other European countries offer similar cost, tax and usage incentives and in Athens and certain Italian cities, EVs are also free to drive in areas restricted to other vehicles to reduce traffic congestion.
Although increasing EV uptake is clearly complex and challenging, we now have the opportunity to build upon the recent infrastructure investments with other interventions to ensure the UK does not fall behind our European counterparts. By applying the right policy levers, understanding the barriers and learning the lessons from elsewhere, there is every reason to believe that the UK can charge ahead with EVs.
David Rees leads PA Consulting Group’s local government services