Ahead of the Chancellor’s Spring Budget, Alastair Cassels, Partner and Head of Automotive Advisory at MHA, called on the Government to renew its stuttering commitment towards a green economy through policies that boost the number of public EV charging points. Following the announcements in March, he offers the following assessment:
Whilst the Spring Budget provided encouragement for many taxpayers to save for the future it did little to secure that future in terms of ensuring that climate change is kept within the parameters set out by the Paris Agreement. With road transport accounting for such a significant proportion of carbon emissions we had hoped to see more investment in ensuring the progress made to date is not surrendered.
Electric Vehicle (EV) infrastructure continues to pay the price of the government’s lack of forward planning regarding the relationship between EV adoption and public charging availability. The UK’s current charging infrastructure boasts one public charger per 50 EV sales and this discrepancy risks stalling the progress in EV sales penetration at a critical time. The UK is now lagging behind the likes of Germany and the Netherlands in terms of access to charging infrastructure and has a more aggressive deadline to decarbonise road transport.
The Spring Budget was a real opportunity for the government to help EV manufacturers and current or prospective owners, especially ahead of the 2030 ban on sales of new petrol and diesel cars and the anticipated Zero-Emissions Vehicle (ZEV) Mandate.
We believe government cannot rely solely on the private sector to provide EV charging infrastructure. It should play its role in boosting EV charging points by encouraging investment and regulation to ensure fair pricing, better accessibility and minimal service levels.
Introducing a VAT reduction on public charging from 20% to 5%, the current taxation rate for domestic users, would have gone a long way to keeping the cost of owning and operating an EV ahead of the equivalent ICE vehicle. Total cost of ownership (TCO) is a key consideration where EVs have historically enjoyed an advantage, but this has been eroded by the spike in wholesale energy costs and the lack of competition in public charging networks.
Now is a critical time for EVs. We have seen good progress to propel sales to 16% of the new passenger car market but as we progress towards 2030 and any interim milestones, we have to persuade more and more drivers that an EV is the right choice. Drivers will only make that choice if the cost and inconvenience factors are minimal versus the alternative. The mass market will require a seamless transition between ICE and EV ownership, and this cannot happen with the current infrastructure investment levels.
The Spring Budget targeted funding for nuclear investment and whilst this is cleaner than some form of energy generation it still comes with environmental risks. We are disappointed that as part of a coherent and holistic energy and manufacturing strategy we did not see specific incentives or investment for creating more battery manufacturing in the UK.
To remain internationally competitive, the UK needs more domestic battery production. Investments in gigafactories, battery and recycling facilities will enable UK producers to create EV products that are more affordable for modest incomes and reduce our reliance on imported Chinese batteries. Current geopolitics and economics have illustrated the perils of single sourcing and as batteries/energy storage become the key commodities of the 21st century the UK would be advised to ensure its long-term industrial future by developing domestic capability as a key part of its net zero strategy.
There is now an ever-growing expectation that the Government will have a ‘Green Day moment’ before the end of the month where we hope to hear more on their net zero, energy security and green finance strategies. It is of utmost importance that we increase our visibility as international competition on green growth continues to build.
Ultimately, the UK remains in danger of falling behind the US and other European neighbours in terms of investment in EV technology. The Government should have used the Spring Budget to boost confidence in the sector and reinforce its pledge of decarbonising the transport sector, but instead this did not happen and we are still waiting.
Find out more about MHA at www.macintyrehudson.co.uk