How the transition to EVs could be helped by the return of the Company Car
- Electric Vehicles are set to dominate UK new car sales by 2030
- This transition could be hampered by cost to the individual car owner
- EV costs could be mitigated if Companies return to providing company cars
- Government revenue loss could be offset by “intelligent” road pricing
November 20th , 2020; LONDON –
DRIVE Software Solutions (“DRIVE”), a leading provider of fleet management technology, today calls on UK companies to back the Government’s “Green Agenda” by expanding the provision of company EVs (Electric Vehicles) for their employees.
The Government’s plan to ban the sale of new petrol and diesel cars and vans by 2030 is a laudable ambition but the lack of detail on the transition to EVs has caused concern amongst manufacturers and the driving lobby. With the cost of EVs still some £10,000 more than petrol, or diesel-powered cars, there is concern that motorists will simply hold on to their traditionally powered car for longer, stalling the transition and compounding the pollution effect.
DRIVE believes that UK companies are the engine of change for this transition; ideally placed and potentially incentivised to facilitate a significant societal change which is required in less than a decade.
In the UK currently, 14 million cars comprise the “Grey Fleet” or personal vehicles used for business purposes. This is equivalent to 40% of all cars on UK roads. Typically, these vehicles tend to be older and more polluting. The British Vehicle Rental and Leasing Association (BVRLA) estimates that this fleet has an average age of over 8 years and that it emits 3.6m tonnes of CO₂ per year.
Converting this fleet to EVs must be considered as key to the Government’s aims and not simply for environmental reasons.
In total, taxes on UK motoring, including excise duty, fuel duties and VAT, raise c. £40bn per annum or 7% of total revenue to the Exchequer. Of this, Benefit in Kind (BiK) payments, covering provision of company cars, raise close to £15bn. From 6 April 2020, a typical petrol or diesel-driven company car would attract a charge of around £1,800 per year for a £30,000 vehicle. Vehicle Excise Duty (VED) rates are also governed by emissions. The Government set out a consultation for changes to VED in March 2020, requiring responses from the industry and stakeholders. It stated in March that it was looking at “ways of improving the ability of VED to incentivize lower-emission car purchases” (Vehicle Excise Duty: Call for Evidence March 2020). Specifically, the Government was seeking views on reforms for existing cars in terms of VED and how a revised system could prompt a migration from the existing, traditionally powered UK fleet to EVs.
Within that, and recognising the potential loss of revenue in a time of higher public borrowing, the UK’s taxation regime for vehicles is likely to move from a charge on ownership to rates based on “usership”. Ahead of further detail, DRIVE is aware of the Treasury’s preference for road pricing rather than VED receipts. This ambitious plan will require systems, either onboard or via app, which allow the tracking of road use by individual drivers or vehicles. In place, these systems could offset the loss of revenue to the Exchequer from the transition to EVs.
DRIVE believes that UK drivers are unlikely to migrate to EVs on environmental principals alone. While the sticker price of an EV remains at a premium to traditionally powered vehicles, in an uncertain economic environment, there is a clear risk that the age of the UK’s fleet simply rises. In order to affect the change required, DRIVE believes that companies must step in and provide workers with access to EVs. In order for companies to be incentivised to do so, the taxation system must be altered to reflect use and not ownership. In order for this to be effective, all concerned must have access to systems which monitor use.
Commenting on DRIVE’s call, Simon West-Oliver, Strategic Partnership Director for DRIVE Software Solutions, said; “This is a coincidence of needs and wants. The Government needs to drive the Green Agenda and wants to raise the use of EVs. The car industry needs visibility over demand for EVs and wants to understand how this will be funded. Motorists need to transition from fossil to electricity and want to know that this is economically possible. Companies need to proactively manage the carbon footprint of their vehicles and want to find a solution that makes it easy to manage the transition from combustion engines to EVs and other power trains. Crucially, The Treasury needs to maximise tax receipts and wants to ensure that this transition does not compromise this challenge. The nexus between all these needs and wants is a system which allows the orderly migration to green vehicles and the transition to usership rather than ownership. ODO DRIVE is that system.”
For more information, please visit www.ododrive.com
About DRIVE Software Solutions
Drive Software Solutions’ developed technologies are responsible for the management of 1.5 million vehicles in 55 countries around the world. From bespoke software platforms and consultancy for individual corporates to ODO, our cloud delivered solution for fleet management, DRIVE is at the forefront of the automotive mobility sector.
DRIVE runs in the Oracle cloud, giving businesses a bespoke platform to manage their fleet and their drivers on the go at anytime, anywhere, using all devices.
Time to optimise your fleet. www.ododrive.com