Energy UK response to the HM Treasury’s Introduction of Electric Vehicle Excise Duty (eVED)

Executive Summary

eVED offers a long-term solution to how our transport system is paid for as the UK transitions to zero-emission transport.  Energy UK therefore supports the introduction of eVED as a forward-looking component of the transition to electric cars. However, Energy UK would urge against implementing eVED before the 2030 ZEV mandate date has been achieved.

Swift mass uptake of Electric Vehicles (EVs) is paramount in delivering our future energy system at lowest cost by enabling the sharing of non-commodity costs across a wider base of end users and providing vital system flexibility. The ZEV mandate is key policy lever in driving the level of EV adoption needed to realise these benefits.

In the near term, particularly over the next four years, when ZEV mandate targets increase most steeply, government policy should prioritise strong price incentives to support the switch to electric. This is especially important for more price-sensitive and risk-averse households. Introducing eVED prematurely would weaken one of the central economic arguments for choosing an EV and risks slowing uptake at a critical point in the transition.

A carefully designed and customer-focused eVED model, which reflects the reality of driving patterns across the UK, will provide the funding needed to strengthen the transport system. However, the Government should not rush its implementation before detailed engagement with industry and drivers has taken place to ensure the proposal doesn’t undermine trust in the transition to electric vehicles. It should be designed in a way to allow both industry and drivers time to adapt, while ensuring nothing detracts from the strength or integrity of the ZEV Mandate. Any introduction of eVED should be ringfenced and reinvested to support the UK’s clean transport system.