Written by Darran Messem, Head of Transport and Sustainable Development
Delivering the UK Government’s targets for emission reduction and electric vehicle (EV) uptake depends on addressing three key challenges, according to a panel of EV experts convened by Madano.
Huge steps have been taken in the decarbonisation and electrification of the UK fleet, but there is much more to be done to (1) stimulate the demand side, (2) secure clearer and longer-term policy from Government and (3) increase automotive and energy cross-sector alignment to deliver the increased electricity grid flexibility, capacity and reliability to enable large-scale EV adoption.
Here we look at the second of these three challenges: securing clearer and longer-term policy.
When discussing demand-side challenges (see previous article in this series)the expert panel kept returning to the impact of confused policy signals on diesel together with the short-term nature of many policy instruments. Arguably the hardest work has to be done now to create the platform for increased demand over the next 20 years. It will be necessary to create more certainty in the market to change both buyer and user behaviour. This will require strong and consistent policy signals upon which informed choices can be made. Key among these signals are the financial signals sent by fiscal and taxation policy.
As the sudden and dramatic increase and then decrease in diesel vehicles shows, Government messaging and fiscal policy have a profound effect in shaping the vehicle market. Already there are clear messages and financial incentives, such as the plug-in car grant, to support EV uptake, but the expert panel’s view was that these signals are insufficient and inconsistent. Here there are three key concerns:
Incentives should be proportionate to emission impact to encourage the better choices. Currently the plug-in car grant applies to plug-in hybrid vehicles even though these may spend the majority of their working lives in combustion-engine operation, although it is recognised plug-in hybrids provide a positive interim technology that helps demonstrate and build confidence. The grant does not adequately reflect the whole-life electric operation of a pure EV. Further, the harmonisation of vehicle excise duty (VED) has not provided a clear market signal, and even greater differentiation in VED bands than existed in the past will be needed to drive clear and sustained patterns of demand. It was noted that VED costs are a key driver in the second-hand market.
Policy needs to be longer term to build confidence in the desired trajectory. There will be a change to EV tax for company cars in 2020. This is creating hesitance in the market today. Positive incentives could be brought forward. Norway is often cited as an example of a successful EV market, and the expert panel noted the consistency and strength of policy signals in Norway. Clear policy signals that extend beyond the short life of one Parliament are needed, which probably requires an Act of Parliament that binds future Governments, as is the case with the Climate Change Act of 2008.
Policy signals need to be consistent across the automotive and energy sectors to provide the necessary information and support. The desire to shift to electric mobility needs to be signalled through domestic charging infrastructure and tariffs, as well as through vehicle incentives and pricing. The expert panel was concerned that the financial structure on electricity pricing for domestic recharging is anything but clear with a potential £28bn hole in H.M. Treasury’s income resulting from petrol and diesel duty reductions, and the threat of this being recouped through domestic tariffs on recharging is acting as a brake on the market. Too few electricity suppliers are offering EV recharging tariffs. Smart meters are not addressing the requirement for optimising recharge time for off-peak supply. Swapping energy supplier remains insufficiently simple to create the market for easier tariffs and supply.
A concluding remark from Madano, who convened the panel and the background research. We set out with this series of articles and panel discussion to explore the barriers to EV uptake and the role of communication. The discussion has highlighted a number of key barriers, ranging public policy through engineering practicality to consumer perception, and we observe that in all cases communication is key, because electric mobility requires whole system change, and this requires joined up thinking. Insight – communication – impact.
This blog is part 3 of a series of 3. The final blog will cover the discussion on automotive and energy cross-sector alignment. You can read part 1 of the series on stimulating the demand side here.
Our expert panel (from Madano breakfast briefing event 18th July)
Madano is grateful to the expert panel who came together for this discussion and agreed to its write-up:
Angie Boakes, General Manager Electric Mobility, Royal Dutch Shell
Professor Paul Maropoulos, Pro-Vice-Chancellor for Research and Enterprise Knowledge Exchange, Aston University
Evie Martell, Marketing Manager, Chargemaster
Huw Owen, Head of Digital, Tata Motors
Jay Parmar, Policy Director, BVRLA
Valerie Shawcross CBE, Transport for London Board Member, and Former Deputy Mayor of London for Transport (attending in a personal capacity)
Akshai Srinivasan, Electric Mobility Manager, BP
Peter Stephens, Head of External Affairs and Government Relations, Nissan