Labour Urged to Prioritize Support for Electric Company Cars to Meet EV Sales Targets
Electric company cars have become a crucial sales channel for manufacturers, with 62% of all registrations in July being company cars. These vehicles are currently subject to an ultra-low 2% benefit-in-kind (BIK) tax band, which has contributed to 83% of new EVs being sold to businesses. However, fleet experts warn that without long-term support from Labour, the UK’s zero-emission vehicle (ZEV) mandate may not be met. The mandate requires 22% of total sales to be electric by 2024, or else manufacturers face fines.
Toby Poston, director of corporate affairs at the British Vehicle Rental and Leasing Association (BVRLA), emphasizes that resolving the lack of support for electric company cars is more urgent than shifting phase-out dates for internal combustion engine (ICE) vehicles. The BVRLA’s Road to Zero Report Card reveals that company car and salary sacrifice schemes account for much stronger EV uptake compared to their share of the new car market. Furthermore, demand for used EVs is slowing, impacting residual values and raising lease costs for fleets. Poston suggests that a consumer communications campaign should be introduced, and the ZEV mandate’s shared mobility credits should be extended to daily rental operators to address the EV demand imbalance.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), echoes these concerns, noting that tax incentives for electric company cars are only confirmed until April 2028. Hawes emphasizes the need for long-term tax visibility to ensure the continued adoption of electric company cars. He also suggests amending the Vehicle Excise Duty (VED) expensive car supplement, which currently adds £410 to the first five tax renewals for vehicles priced at £40,000 or more. As five of the top 10 most popular electric cars in 2023 have entry prices above this threshold, Hawes argues that EVs should not be classified as luxuries.
Dominic Phinn, head of transport at The Climate Group, emphasizes the importance of charging infrastructure to support drivers without off-street parking. He suggests solutions such as pavement gullies that allow charging cables to cross pavements without causing obstruction. Phinn also highlights the need for easier installation of charging points at commercial premises.
Overall, experts and industry leaders agree that Labour must prioritize long-term support for electric company cars. This includes implementing a consumer communications campaign, extending the ZEV mandate’s shared mobility credits, and ensuring tax incentives and charging infrastructure are in place. Failure to address these issues may result in falling short of EV sales targets and hinder the transition to a greener automotive industry.
