Looking at https://commonslibrary.parliament.uk/research-briefings/sn06167/ the current budget deficit (ie excluding investment spending) was pretty much at zero before the pandemic hit. (Section 7 with the graph).
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UK switching to electric vehicles discussion
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Yes indeed and we pay 20% VAT on electricity, so why would owners and future owners of EVs also have to pay an additional charge?
Actually, domestic electricity is charged at a rate of 5% unless it is for business purposes.
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Oooops, typo there, I meant 5%. Have amended the post.
I've only had one cup of tea so far. Back on topic, - I assume that energy purchased from a charging station is effectively charged to the vendor at 20%, so that would be reflected in the price to the end user.
@JamesT beat me to it but again what you are claiming simply isn’t true either as a percentage of GDP or in absolute terms.
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Indeed and public charging is currently 20% VAT so there is an unfair mismatch here which needs to be looked at.
From what I've seen this is indeed the case:
EV operators plead with Chancellor cut VAT for public charging network | RAC Drive
Electric vehicle chargepoint operators have urged the Chancellor Kwarteng to cut VAT on public charging following a rise in prices across the UK.
www.rac.co.uk
We already have universal road pricing*. Its called fuel duty.
*except for EVs.
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Leaving aside that VAT on domestic electricity is 5% … the answer to the question is “because its not enough to cover the gap”
A car that averages 45mpg will be paying tax (fuel duty and VAT) of roughly 7.5p / mile.
An EV that averages 3.5m/kWh, charged at home, will be paying tax (VAT) of roughly 0.37p / mile.
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renegademaster
Established Member
Which by design, suppresses economic activity
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Apologies, It seemed I remembered the exact economic stats wrong. Even so, I don't know why this board has suddenly become fans of austerity. Running a deficit is good if the extra money is used to unclogg the economy and a balanced budget isn't an automatic good. Nor does every tax burden have to fall on the working and middle class like which pro road pricing people on this thread seem to think it should.
Allowing more people who don't live in contested metropolitan areas will go a long way to easing the economic damage of the labour shortage, without needing much new infrastructure spending. For those congested metropolitan areas, they can decide their own schemes to manage it rather than the central government forcing a one size fits all solution on everyone
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I have actually corrected myself on the domestic rate above. As for the gap, whilst it will still be an issue just simply topping it up with an additional charge isn't necessarily the best approach. For a start, where's the incentive to switch to EVs? Given that for now at least they are more expensive than their ICE counterparts, adding an additional charge isn't exactly going to have people rushing to upgrade. But as with all things taxes / public funds, a loss in one area could be made up elsewhere, and not necessarily by increasing elsewhere. I think someone upthread quoted a potential annual loss of £24bn, and whilst that sounds a lot governments have p*ssed a lot more than that up the wall over the years. If we had a Chancellor with a better background, backed by a more pragmatic cabinet & senior civil servants could probably find savings within the overall public spend well in excess of that amount. In fact between you, me, the gatepost and everyone on the thread I'm certain they could. I'd say more but you know, more than my job's worth and all...
My bold: The issue here is that either we tax the very wealthy more, or we raise the additional money out of other means (income tax, VAT etc). For the former most governments (of all colours) seem very reluctant to do this (in a meaningful way which would be required) so I think some realism is required, for the latter is it really fair that people who don’t or can’t use a car end up being taxed more for this? The other option of course is cuts to services…
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£24billion plus VAT receipts on top of that.
How many times have I heard the phrase ‘just cut government waste and red tape’…
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You've probably heard it a lot because, well frankly its actually quite true especially the former.
Except that this is not a national issue. Car and charger interoperability is standardized physically across all of Europe, and the communication layer is interoperable in both Europe and North America. Your suggestion for "Road Tax based on Cryptographically Signed Charging Sessions" is not a part of this global standard.
If such a law were introduced, you can expect the majority of auto makers and charging station manufacturers to simply exit the market, since the R&D costs would be extortionate.
Compare this to legislation like California's NEVI. There, they took the latest in already published standards and have begun demanding compliance from charging stations and cars. The end result isn't tax take, but better adoption of EVs due to massively improved charging station reliability and interoperability. Manufacturers didn't run to the hills, because most of them had already begun R&D on the standards compliance anyway.
They are rapidly coming down in price. Citroen are bringing the eC3 next year that will be £21k for circa 250 mile WLTP range.
And the running costs are much lower. They are so much more efficient, an EV does the equivalent of about 150mpg when compared with the energy content of petrol or diesel. EG my Tesla fully charged is 70kWh ish. That will take me 250-300 miles at 70mph. 70kWh is roughly equivalent the to energy content of 7 litres of petrol (yes, seven, not seventy!). I've done 25,000 miles in my second hand Tesla bought in May. I have done zero maintenance (other than a motor replacement which was done under warranty) and am just about to buy a couple of tyres. ICE would have had 2 or 3 services by now which could easily have come to nearly £1,000. That initial outlay is quickly eroded by running costs being an order of magnitude lower compared to ICE, and a much better driving experience.
To bring it back on point, 5% or 20% VAT on electricity is not going to replace the revenue lost from fuel duty, it won't even touch the sides. Unless you make electricity for charging vehicles absurdly expensive (and it's technically non-trivial to separate it out from the household usage, you need to fid something else to replace that lost tax revenue.
It is true. But then that should happen anyway. And not just be used to fund a tax reduction on motorists, when it could be much more effectively used on other priorities.
They are coming down in price, but perhaps not enough for many. It doesn't matter if they are cheaper to run if you can't afford to buy them in the first place. And then of course there's that issue of what it costs, its only cheaper for home charging which isn't possible for a lot of people, save of course running cables through windows or doors and trailing across streets (I've already seen on example of this in my local area, from a 1st floor flat!).
And as for revenue I've already mentioned that above.
Most people buy their cars on some kind of finance (be it bank loan or the dealer/manufacturer offer). If you're doing 1,000 miles a month that generates at least £150 of fuel savings if charging at home, and probably more like £200 for a larger car, to offset against a higher monthly payment if indeed it is higher.
Yes not everyone can charge at home. But many people can and it's really a no brainer in that case if you're doing average or greater than average annual mileage. If I couldn't charge at home I think I'd probably still want an EV because it's so much better to drive.
Diesel cars were always more expensive than petrol, but for those doing high mileage the maths quickly demonstrated the long-term savings. Hence the sales rose, until we discovered that diesel was bad....
Now EVs are also more expensive than petrol (and diesel is for a lot of people no longer a consideration, because modern petrol engines are pretty efficient and MUCH cheaper) but if you can charge at home on a cheap tariff, the savings are immense.
ALL new cars are out of the reach of a lot of people, and that's why many people buy second hand cars which are a lot cheaper. It has always been thus.
Bletchleyite
Veteran Member
Or they're in use but we consider it a waste of money paying for depreciation.
Of course, it takes time for the used market to filter through. Another ten years and it'll be as healthy as it at all levels is for ICEs. Five and it'll be healthy for those who like to buy ex-fleet at about 3 years old and the likes (hence why I'm thinking one more petrol then EV - I tend to buy about 2-3 years old and keep for 3-5 years).
Of course, apart from those who must have the latest trim/gadgets on their cars, the potentially longer life of the major parts of EVs is likely to encourage those owning second hand vehicles to keep them much longer than is done with ICVs.
Bletchleyite
Veteran Member
Potentially some will. But many people change cars because they get bored of them and a 3-5 year personal loan or other finance gives an attractive monthly payment. I'd probably expect this is a very large number of people.
Pretty much nobody needs to upgrade their phone on a 2 year cycle (yes, the battery does tend to weaken over that sort of period, but replacements are much cheaper than a new phone), but a very large number of people do. Possibly even the majority.
This.
The battery is the most likely problem for older EVs (especially those with high mileages) and while the anti-EV brigade will quote £20k for a new battery pack (as if anyone replacing an engine on an old banger went to the manufacturer to buy a new one) there will be many businesses offering refurbished batteries for older cars, or even companies offering to repair faulty cells and recalibrate BMS etc.
Obviously there will be the usual parts like suspension, brakes, tyres and some cooling systems but in comparison to an ICE car, a 10-15 year old EV is going to be a lot safer a bet than the equivalent ICE car.
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There is now evidence that this is changing as most people no longer see a smartphone as a cool thing to show off with - it's a device to access apps. As long as they can do that, and you don't break the phone, you're good. The EU will soon mandate that devices must make it easier to change the battery (the one thing that might make some people upgrade instead of just replacing the battery) and now Google and Apple are each offering many years of OS updates and others are catching up.
People don't upgrade their PCs, laptops or tablets every few years.. many will keep using them for 5-10 years and only change if they suddenly don't work with a new app, or it breaks down.
People don't change TVs often, usually a minimum of seven years. Smart TVs may have forced some people to upgrade early, but now most people just use a plug-in set top box or stick that can be changed instead of the whole TV.
Another consideration might be that people are simply unable to afford to just keep upgrading their tech, but I think more people are just seeing a smartphone as a tool not a fashion item as they perhaps once were (and none more so than before smartphones where phones came in all different form factors and colours).
I suspect that the thing that will cause a lot of modern cars <edit> ...to be scrapped </edit> will be from glitches in the software, sensors and electronics. Some of these will just be annoying, but some will be an MOT failure.
I've got a 2012 Mondeo which is fine mechanically, but has issues with the electronic locking on a rear door (probably from water damage to the wiring), and recently had the immobiliser come on, which meant being recovered to a dealer, where they replaced the ignition switch and transponder.
I was thinking of getting a KIA Niro and read some forums, with people grumbling about the Forward Collision-Avoidance Assistance. Some of those might be hardware and software issues that will get fixed in time, as its still in the 7 year warranty, but its a worry for the long term.
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Bletchleyite
Veteran Member
With you on this. Internal combustion engines may seem complex, and they are, but they're also a very mature technology and provided they are maintained correctly, with the odd exception*, are very reliable and will often outlast the car before any expensive failures occur. Electrical faults are far more common (including availability of parts for electronic components), and EVs will naturally experience more of these, or certainly no fewer.
Similarly, manual gearbox failures are almost unknown, and replacement clutches are a thing that are basically a tax on people who slip the clutch unnecessarily - if you drive with mechanical sympathy it'll last as long as the car.
* PSA 1.4 turbodiesel, I'm looking at you
Yes, which is why I think smaller cars without such features (Citroen will have a cheaper e-C3 that won't even come with a display, with users hooking up their own device for navigation etc) will be very popular, precisely because they won't have a lot of the things that could prove very expensive in future years.
Even things like automatic bootlids are a recipe for disaster when they get older - and many cars are full of gimmicks.
I'm all for safety features*, but a lot of the things added on cars are there to justify the high price. Volvo has simplified a lot of things on its new EX30 (although a display directly in front of the driver is one thing I would NOT have wanted to have taken away - I hate that on Teslas also) but there are still lots of toys to go wrong.
* Actually I like the toys too, and things like ambient lighting and non-essential stuff, but I know that with these features comes a risk of issues in the future. Maybe less so if I've owned and looked after the car the whole time, but more of a concern if a car has had multiple owners and not been cared for.
Bletchleyite
Veteran Member
Dacia already don't provide a screen on their base models. I'm all for that - as they say "why pay for a fancy screen when you've got one in your pocket".
My personal dislike is electronic handbrakes, but it's almost impossible to avoid them now. There is absolutely nothing wrong with a traditional cable-operated one, and it's better in some ways, e.g. being able to use it to assist in pulling off smoothly without rolling back, with no need for even more electronic junk e.g. "hill start assist" to mitigate its absence.
Indeed many people do buy cars through some sort of credit, and generally speaking the more you borrow the more the monthly repayments, assuming of course people could get credit for an EV in the first place. After the impact of the cost of living crisis I imagine plenty of people might struggle having maxed out their credit elsewhere.
In time they will come down in price, and hopefully more on-street charging solutions found. Its just probably going to take longer than some hope for.
Nah. The electric handbrakes work really well. There's no rolling back or anything.