We look at how the world is moving towards electric vehicles and how the UK plans to use this industry to reach its net zero goals by 2050.
If you concentrate on the cars on the roads, you will notice that electric vehicles have become more popular five years ago. As stated by Connected Kerb, electric vehicles had a record year in 2020, with more than 10 million of them recorded on the world’s roads. This is defiantly a positive sign for the UK’s goal of banning the sale of new gasoline and diesel vehicles by 2030. In addition, new hybrids have also been given until 2035 to be phased out, depending on their capabilities of covering long distances on zero emission mode.
To reach this goal, Prime Minister Boris Johnson and Secretary of State for Business, Energy & Industrial Strategy, Alok Sharma, have created a Ten Point Plan that will support and protect hundreds of thousands of green jobs whilst making strides towards net zero by 2050.
Johnson said that “our green industrial revolution will be powered by the wind turbines of Scotland and the North East, propelled by the electric vehicles made in the Midlands and advanced by the latest technologies developed in Wales, so we can look ahead to a more prosperous, greener future.”
The Ten Point Plan
The acceleration of the shift to zero emission vehicles is Johnson and Sharma’s fourth point of their Ten Point Plan. Within this point, they believe that zero emission vehicles can be the most visible incarnation of our ability to simultaneously create jobs, strengthen British industry, cut emissions, and continue travelling. As part of this plan, The Department for Business Energy and industrial strategy (BEIS) has announced that it will contribute £91.7mn in funding to advance green auto tech to help drive this achievement. The funding will help develop the technology needed to increase the performance and take-up of electric vehicles. So far, BEIS has invested in four projects that stand to save nearly 32 million tonnes of carbon emissions and secure over 2,700 jobs across the country.
The main policy impacts that are to come from this point include: achieving carbon savings of around 300 Mt CO2 by 2050; reaching thousands more ultra-low and zero emission cars and vans on UK roads; supported by additional funding for plug-in vehicle grants as well as thousands more charge points in homes, workplaces, in residential streets and along motorways and major roads.
While bringing in more electric vehicles is a great way to decrease emissions, there is the worry that most of these vehicles are out of reach for a large chunk of the UK population. The pandemic has caused many job losses, salary cuts and the addition of the government cutting grants from £3,000 to just £2,500 for electric cars; Transport Minister Rachel Maclean has even suggested that the grants may be removed entirely. While electric vehicles are more affordable than five years ago, it is still a stretch for many middle and lower-class workers.
However, as FI Group has stated, companies can start helping their employees by offering company cars and salary sacrifice schemes. These options can be desirable due to the benefit-in-kind tax savings from choosing an electric vehicle. Typically, all maintenance, road tax, business insurance, and breakdown cover costs are included within the monthly expense, deducted from the employee’s gross salary. This creates savings in income tax and national insurance contributions, which can be significant. In addition, while benefit-in-kind tax is payable on the car provided, if employees select electric vehicles with zero emissions, they benefit from a tax rate of just 1% in the current tax year. Employers, as a result, see monthly savings in national insurance contributions and VAT and provide employees with clean, fully maintained vehicles which helps manage their grey fleet risk.
Another major issue that needs to be addressed by the UK government is the need for electric vehicle infrastructure. Connected Kerb recently shared that without access to efficient charging, the uptake of electric vehicles could stall, and with it, global ambitions to secure net zero by 2050.
However, the government plans to provide £1.3bn of government funding to build public and private charging points, adding to the 17,947 chargers that already help the UK’s 758,200 electric vehicles get around. On top of this, companies such as Connected Kerb are on a mission to make charging affordable, sustainable and accessible to all, regardless of social status, geography or physical ability. This means working with councils, developers, fleets and real estate companies to deliver a reliable charging network that provides on-street residential charging facilities where residents do not have access to off-street parking, which are often in areas most susceptible to poor air quality. It also means increasing deployment in rural areas where charging blackspots exist, not just urban centres where revenue is more likely to be clawed back quickly.
No new ICE vehicles to be sold in the UK
At the recent COP26, the UK’s plans to ban the sale of gasoline and diesel vehicles by 2040 at the latest was dealt a major blow. Countries that produce a lot of the world’s vehicles have not committed to this pledge. The US, China, Germany and France have chosen not to become part of the list of signatories, while only 32 other countries (including India, Turkey and 12 generally high-ambition EU member countries) have agreed to the plan.
While having countries on board is very important, it is also essential to have major car manufacturers as part of the signatories. From the car manufacturing industry, Volvo, Daimler, Ford and General Motors have agreed to the UK’s plan to ban the sale of gasoline and diesel vehicles by 2040. They commit to working “towards reaching 100% zero-emission new car and van sales in leading markets by 2035 or earlier, supported by a business strategy that is in line with achieving this ambition”.
However, not all manufacturers agreed to sign up. Volkswagen, Renault, Stellantis, BMW and Nissan opted out. Volkswagen, Renault, Stellantis, BMW and Nissan have decided to opt-out of the agreement. Helen Clarkson, the head of the non-profit organisation Climate Group, said companies that were “not at the table on ‘Transport Day’ are on the wrong side of history”.
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Among other top companies and cities onboard are ride-hailing company Uber and food retailer Sainsbury’s. At the same time, the South Korean capital Seoul and Brazil’s Sao Paolo have also signed the agreement.