Fleet News

‘Unprecedented’ action required to develop plug-in market

In order to develop the UK’s comparative advantage in the expanding international ultra-low emission vehicle (ULEV) market, the Government and industry must take unprecedented concerted action, an influential think tank reports.

The report, from the Institute for Public Policy Research (IPPR), suggests this should focus on three areas of industrial policy:

  • Ensuring that domestic firms in the automotive supply chain have access to the finance that they need.
  • Providing greater public investment for the application and commercialisation of innovation.
  • Adopting new strategies in higher education, immigration and apprenticeship policy to ensure that the supply of engineers keeps pace with demand from the automotive industry.

However, this comparative advantage can only be maintained by the development of a vibrant domestic ULEV market.

To achieve this, the IPPR report ‘Leading the charge: Can Britain develop a global advantage in ultra-low emission vehicles?’ says action is required in several areas:

  • Purchase incentives currently provided by the government should be more actively promoted, and guaranteed for longer periods to give greater certainty to buyers.
  • Current usage incentives such as free parking spaces should be expanded, and other incentives such as free use of toll roads for ULEVs considered. A single ‘green badge’ scheme should be introduced to make it easier to identify qualifying vehicles.
  • As a major procurer of vehicles, government should do more to drive demand for ULEVs by phasing in more stringent emission standards to the government buying standards for transport.
  • Government should ensure that all ULEV buyers have access to safe charging point infrastructure for home, public, and private business use.
  • New rapid charging stations should be placed at locally-identified strategic locations.
  • Efforts to decarbonise the electricity system should be strengthened to ensure that drivers are not switching from dirty petrol-fuelled cars to dirty electricity-powered cars.
  • The electricity network should be upgraded to meet additional demand from ULEVs.

The BVRLA has welcomed the publication of a new independent report from the IPPR think-tank on how the UK can grab the full opportunity presented by ultra-low carbon vehicles.

The association was consulted during the drafting of the report and was particularly interested in its comments on the removal of 100% First-Year Allowances for lease cars.

The report says: “Many interviewees argued that the key to promoting ULEV uptake lay in supporting leasing and rental companies, partly as a means of allowing the public to gain experience of ULEVs.

“Most cars and vans are bought through some form of leasing or rental company. In 2011 58% of new vehicle registrations were made by businesses, and of these registrations over 90% were part of a fleet of 25 vehicles or more.

“In the fourth quarter of 2011, 74% of fleets had vehicles financed on a contract hire basis, 22% had vehicles financed on an ad hoc hire basis, and 19% of fleets had vehicles financed on a finance lease basis.

“Furthermore, 66.5% of consumers used either hire purchase arrangements or personal lease arrangements.

“Therefore the changes made in the 2012 budget, which removed the availability of enhanced capital allowances for ULEVs to leasing and rental companies, have had a serious impact on the fiscal incentives available to support ULEV uptake, particularly by public sector bodies.

“IPPR has been told that the removal of the availability of 100% first year capital allowances to leasing and rental companies could add 3-5% to the cost of a car lease, or up to £15 per month on a £300 per month lease.

“For a fleet of 25 ULEVs financed over a four -year period, this adds a total of £18,000 to the cost of that fleet of ULEVs.

“We recommend that the government immediately reinstate the 100% first year capital allowance availability for leasing and rental companies.”

BVRLA chief executive John Lewis said: “We are delighted that this independent report has recognised the vital importance of the vehicle rental and leasing industry in driving the uptake of ultra-low emission vehicles, something that the government has chosen to ignore.

“We will continue to lobby for them to reinstate 100% First Year Allowances for our sector. Sales of new ultra-low carbon vehicles will not progress as everyone wants them to unless this happens.”

 


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Comments

  • Patriot - 17/04/2013 15:20

    All of the above is a long-winded way of saying to HMG: Give us more money. To the author; Listen sunshine, if people wanted ULEV's and pure EV's they'd buy the damn things. Stop trying to force these down our throats, if the market does not demand them then tough.

    • Ian M. - 17/04/2013 15:53

      @Patriot - I would suggest from personal experience that you are quite wrong in your assessment of the reasons for a slow uptake. The biggest stumbling block from a business point of view is the cost of the charging infrastructure. Although there are schemes that offer 50% and, sometimes, 75% discount what actually happens is that the company carrying out the work charge top dollar to the client and then gets the same amount back from the government. To have double headed charge points at two of our sites we had quotes in excess of £8,000 which makes the ROI a joke. At this point most companies give it up as a bad idea but I found that by going directly to the manufacturer prices can be reduced by a huge amount...in our case down to just under £2,000 fully installed...making it economically viable for us to switch to electric vans. That's done by NOT taking the government grant and not lining the pockets of the companies that want to jump on the bandwagen and milk it for all they're worth.

    • P - 17/04/2013 16:07

      @Ian M. - Thanks for that. Just how long will it take you to get a return on the £2k? I don't think I am wrong. In your words;It is the initial costs that are the stumbling block, if fleets and/or companies want these types of vehicles they can do what you or any sensible person can do, go to the organ grinder. My main point is why should the IPPR and BVRLA expect the Treasury to cough up our money? When I have to/decide on Capital Expenditure I do not write to HMG and say 'pls gif money'

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