Decarbonising mobility; controlling the costs and preserving the benefits for all

Mike Hawes, SMMT Chief Executive

The next decade will see one of the most profound shifts seen in mobility since the invention of the automobile – and local authorities will have a crucial role to play in ensuring a zero emission vehicle revolution will be accessible and deliverable for all.

Following the government’s confirmation that new petrol and diesel cars and vans will no longer be sold from 2030, it is vital that all stakeholders – manufacturers, local authorities, energy providers, government and more – play their part in facilitating the transition to electric, which will deliver substantial environmental, social and economic benefits if managed well.

The automotive industry has been decarbonising mobility for many years. In the first instance, motor transport has decarbonised dramatically in the past 20 years, with today’s average car producing around 37% less CO2  from its tailpipe than its 2000 equivalent. This has been partially driven by the increase in electric vehicle uptake – just over one in 10 cars registered in 2020 was either battery electric or a plug-in hybrid. Improvements to internal combustion engines (ICE), the dominant vehicle choice, have also contributed. However, as the end of sale date draws nearer, it is vital that electric mobility is encouraged and promoted, bringing benefits for drivers and wider society alike.

The main barrier to acquisition is the purchase price, with an SMMT/Savanta ComRes poll finding that 52% of drivers were put off by the initial outlay required. Battery electric vehicles are comprised of highly advanced technologies and currently are not produced to the same economies of scale as ICE vehicles, which means that their purchase cost is substantially greater, even with the government’s £3,000 Plug-in Car Grant. However, it is expected that this cost will reduce over the next decade as electric vehicles become more commonplace.

However, encouraging uptake will need further incentives. Drivers can be attracted to make the switch with a package of measures that results in these vehicles becoming much more affordable and ideally, tax-free. Specifically, SMMT believes electric vehicles should:

  • Continue to be supported through the Plug-in Car Grant (PiCG), which should be extended for a longer time and reintroduced for plug-in hybrids;
  • Pay no Value Added Tax (VAT);
  • Pay no Vehicle Excise Duty (VED);
  • Pay no Company Car Tax (CCT); and
  • Be exempt from the Insurance Premium Tax (IPT).

Any revenue impact on the Treasury should be balanced with potential savings that can be achieved in health and social care due to improved air quality. If a car averaging 60 miles per gallon covering 8,000 miles a year emits around 1.5 tonnes of CO2, clearly there are monumental emissions reductions available. In addition to CO2 savings, this would significantly reduce nitrogen oxide (NOX) emissions. In short, decarbonising mobility is beneficial from both environmental and economic perspectives.

Looking further ahead, the cost of electricity is a fraction of that of petrol or diesel, so even in the unlikely event of a collapse in oil prices, this would not affect the transition. Running costs, particularly for battery electric vehicles, are substantially less than their internal combustion engine (ICE) counterparts, by as much as 33% in some cases.

For local authorities wanting to reap the benefits of reduced emissions and impact on their infrastructure, the main challenge is ensuring their area is conducive to electric vehicle drivers and encouraging uptake of these new vehicles that reduce overall social costs.

After purchase price, the main factor inhibiting electric motoring is charging point availability, with 44% of drivers saying there were not enough charging points in their local area. Since 2011, the number of charging points has increased by 2,000%, and government and local authorities deserve a lot of credit for delivering this result in less than a decade. However, SMMT estimates that to support the market, by 2030 there would need to be around two million public charging points in place up from around 20,000 today. This would come at a cost of around £13.5 billion. Local authorities will be essential in delivering this volume of charging points – although not necessarily the full capital required – and SMMT believes that those authorities should be given greater support to approve and commission charging point installations, to avoid areas being ‘left behind’.

With a comprehensive charging infrastructure roll-out strategy from government, which supports local authorities in making electric vehicle use more attractive, convenient and affordable, it is possible to deliver a green transition that improves air quality, reduces social and environmental impact, and costs for drivers. Decarbonising mobility can, and will, be affordable, desirable, and feasible.

This article is from our Local Path to Net Zero series.