The Government needs to respond to Labour’s electric vehicle proposals

In 2017 the UK Government pledged to end the sale of diesel and petrol cars by 2040. Despite sales of pure electric vehicles (EVs) doubling in the last year, the proportion of new car sales that are EVs remains worryingly low at 2.5%. It is unfortunate that the Government’s most visible reaction to disappointing EV take-up is to propose green number plates. It is also an open goal for the opposition.

Labour’s EV proposals lead the way

It is undeniable that the Labour Party has taken the lead in proposing actionable, but expensive, EV policies. Labour’s proposals were laid out by Shadow Business Secretary Rebecca Long-Bailey at their Party Conference in September, and have two main components:

• Loans to buyers of electric vehicles: Labour is proposing 2.5 million interest-free loans of up to £33,000 for buyers of electric vehicles, a total loan value of £60 billion.
• State-ownership of car manufacturing: Labour wants the government to invest £6 billion into car manufacturing, including setting up state-owned battery “gigafactories”.

The two important principles are that electric vehicles must be affordable, and that the market alone cannot deliver the manufacturing facilities required for electric vehicles. The challenge for the Conservatives is to show that EVs can thrive without the State taking control.

Norway, making EVs work for consumers

The good news for Conservatives is that they need look no further than Norway to find an example of electric vehicle success. In Norway, EV sales were a staggering 61% of total car sales in the first quarter of 2019, compared to just 2.5% in the UK so far this year. The Norwegian model has focused on the rules that the Government controls, including vehicle taxes, toll roads, parking rules, bus lane access, and ferry fees. The Norwegians have been so successful that they could hit 100% electric new car sales before their legal target of 2025.  

Source: Mario Roberto Durán Ortiz and OFV (Norwegian Road Information Board), via Wikipedia. Historical data (blue) and linear path to 2025 (red). *2019 data is Q1 2019 only.

The UK Government needs to step up

In contrast to Norway, EV sales in the UK remain anaemic (chart below) and the mood music from the Government on EVs has been mixed. Changes to Vehicle Excise Duty (VED or “road tax”) in 2017 have hit buyers of EVs that cost over £40,000 (the majority of the market), while in 2018 the government grant for new EVs was cut by £1,000. On the plus side, the Government’s Office for Low Emission Vehicles (OLEV) is working to accelerate the roll-out of EV charging points. 

Source: Norway (blue), source as above. UK (black) SMMT. *UK data Jan-Sep 2019.

Whilst the Government mulls its first Transport Decarbonisation Plan, Local Authorities are taking the lead. London is marching ahead with the Ultra Low Emissions Zone (ULEZ) and the roll-out of electric buses, and has already banned the sale of petrol and diesel taxis.

The 2040 cut-off for the sale of new petrol and diesel vehicles already feels unambitious when you consider the Norwegian experience. The new Transport Secretary Grant Shapps is considering bringing forward the ban to 2035, but in the context of a market share for EVs of under 3% of new sales we need action now rather than tweaks in the 2030s.

Norway-plus

Building on the Norwegian experience, my three suggestions for the Government are:

• Implement Norwegian-style EV incentives: the Norwegians have shown us the way when it comes to bringing EVs to market. We need a stronger and joined-up program of tax incentives and local measures including preferential parking. Government also needs to support Local Authorities rolling out Clean Air Zones. The rush of new EV models coming to market make it a great time for the UK to incentivise EV take-up.
• Plan for how EV incentives will be phased-out over time: one area where the UK can improve on the Norwegian model is how to handle a phase-out of incentives once EVs become the norm. It makes perfect sense to automatically reduce or remove certain EV benefits once penetration reaches certain levels, and by embedding the reductions in the design of schemes EV buyers will know what to expect.
• Use competitive procurement to accelerate the roll-out of public EV charge points: EV charging infrastructure remains a huge challenge, not least to convince skeptical EV buyers with range anxiety. To allay these concerns, the Government should look at competitively procuring public EV charging points. The Government has a great record using competitive procurement to reduce prices and accelerate deployment, not least for offshore wind.

We now have a Transport Secretary who is an electric vehicle owner, and who believes in accelerating the deployment of electric vehicles. Now is the time for the Government to tackle our low EV deployment, else the call for publicly-owned gigafactories and State control of electric vehicle manufacturing will start to seem reasonable.