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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Is The UK Doing Enough To Stimulate EV Sales?

Sales of plug-in hybrids and battery electric cars in the UK inched up to 7 percent of total sales in the first quarter of the year, Reuters’ John Kemp wrote this week. That’s up from just 2 percent for the first quarters of both last year and 2018. The increase may not be particularly impressive as a portion of total car sales, but it may be meaningful for the shift from internal combustion engine cars to battery EVs.

Last month, The Telegraph reported that the government was mulling over a so-called car scrappage scheme, under which drivers will be given up to $7,600 to swap their internal combustion engine car for an electric vehicle. Less than a month later, the government dismissed the report.

“We have no current plans to change the existing incentives or to introduce a scrappage scheme. We are committed to building a greener transport system and reducing carbon emissions to reach our goal of net zero by 2050,” a spokesman for Downing Street 10 said, as quoted by Car Dealer Magazine this week.

The current incentives are not half bad. For starters, drivers buying EVs are entitled to a 35-percent plug-in car grant of up to 35%, or a maximum of $4,370 (3,500 pounds), of the price of the car. They are also exempt from the vehicle excise duty that other drivers have to pay for a new car, and they are also exempt from the London congestion charge. On top of that, the full price of the car is tax deductible, and parking is free in multiple locations across the country.

That’s certainly not too shabby as a way to motivate people to switch from ICE cars to EVs. And this motivation could spread across the population relatively quickly, according to Kemp, who cites a concept called an S-shaped logistics curve. Related: Why Power Companies Can’t Ditch Coal Just Yet

According to this concept, new technology spread unevenly, usually with a slow start following by increasingly quick adoption. Based on this, Kemp says, despite a wide margin of error, the UK could see EVs rising from 7 percent to as much as a quarter of all new car sales in just seven years, to grow further to half of all new car sales by 2031 and 75 percent by 2035.

The pandemic, meanwhile, could help this trend of adoption. Although the UK economy has been battered by the virus spread and the lockdown, it will begin improving at some point, and those generous incentives the government is granting EV buyers could become a lot more attractive even to people mistrustful of any new technology.

And more incentives are not out of the question: UK car sales in May took a nosedive of 89 percent. Car dealers across the country are preparing to start cutting jobs, and as many as 150,000 are under threat, out of a total 600,000 employed in the car dealership industry. Now they are also calling for more incentives.

“We would welcome any stimulus for the sector, whether that be a scrappage scheme, grants or some form of VAT discounting. Stimulus is needed for the sector,” said the chief executive of Marshall, one of the UK’s largest car dealerships, Daksh Gupta. 

The additional incentives—if they are approved—will likely not be confined to just plug-in EVs. To provide any meaningful help to the car dealing industry, the government would need to include ICE cars in any new incentives as well. But any additional incentive would likely make EVs more appealing. It is only a matter of time to see whether the S-shaped logistic curve will work for them in the UK.

By Irina Slav for Oilprice.com

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