Government prematurely scaling back support, while van drivers keen to transition to electric vehicles
While government is set to scale back support, van drivers and commercial fleets recognise the benefits of going electric, but need fast charging points and EV subsidies to adopt electric vehicles (EVs), think tank highlights.
In a report out today, the Social Market Foundation – a cross-party think tank –calls for funding to install fast charging points around the country. Businesses that spoke to the SMF said that in order for them to decarbonise and access the cost-savings of adopting EVs, the government needs to address high upfront costs and provide adequate charging infrastructure.
Businesses the SMF spoke to highlighted the pressing need for reliable and fast charging options. One interviewee puts it clearly, saying that “the cost of EVs is also a factor, but when we don’t have [battery life] reliability problems, it will be less of an issue”. The necessity for fast-charging infrastructure as crucial for making EV adoption more cost-effective is also highlighted, as one interviewee said that in most chargepoints “charging the battery takes too long, and we pay drivers per hour”.
Current EV battery technology is not at the levels where EV commercial vehicles can compete like-for-like with fossil fuel vehicles, and it is rendering them unviable for some businesses. While long-range EV batteries are inevitable technology, there is still some time to go – and fast-charging points are critical in that period to encourage and reassure businesses to go electric.
Last year, the government failed to meet its target of having six or more rapid or ultra-rapid electric vehicle chargers at every motorway service area in England. Despite announcing a rapid charging fund, worth £950m, to improving chargepoint-related infrastructure, in 2024, most of this money has yet to be spent. Moreover, that money is earmarked for grid connections rather than the installation of the fast, regular charge points van drivers say they care most about.
The SMF also noted that the upfront cost barrier is particularly significant for SMEs, and tied closely with concern around reliability of the technology. For instance, one interviewee noted that the price point meant it “can’t afford that outright” and so are left with the option of second hand EVs, and “second hand electric vehicles are probably not reliable”. While the purchase price gap between EVs and regular vehicles has narrowed in recent years, the narrowing has been slower in the last few years.
It is also worth noting that cost barriers of EVs will remain for businesses, and likely worsen, as existing business-EV subsidies are set to come to an end in 2025. At the same time, the government continues to mandate automakers to incrementally increase their proportion of EV sales, to achieve 100% of vehicle sales by 2035. This means that while supply of EVs is likely to be maintained, it won’t be matched by demand if government steps back from commitments to help with upfront costs and improving charging infrastructure, the SMF said.
With the country poised at a crucial moment in the decarbonisation journey, additional cost support and infrastructure funding is needed to sustain momentum, the SMF argue.
The existing subsidies have been essential to facilitating the switch from regular to electric vehicles among businesses – the benefit-in-kind company car tax and plug-in van and truck grant are recognised as among the most effective policy interventions. For instance, in 2019/20, there were just 4,000 pure electric company cars; a year later, after the zero-percentage rate (benefit in kind rate) was introduced, it was 52,000 – a 1,300% increase.
Prioritising funding for the rollout of fast-charging points in future EV policy has the dual advantage of increasing business and consumer confidence in going electric, the SMF notes.
Jake Shepherd, senior researcher at Social Market Foundation, said: “The government continues to put obligations on automakers for a portion of their sales to be EVs – and collect fines from those who don’t – but has conveniently taken a step back from its commitments encouraging demand for those EVs.
Support for businesses to adopt EVs is a key part of the commitments, and progress thus far has been driven by effective subsidies. Still, growth in the adoption rate is sluggish, but we are certain that business sentiment is positive; they are willing and eager to go electric – recognising both environmental benefits and the cost savings. The key barriers in their way are charging infrastructure and upfront costs.
Instead of going further, the government is taking a several steps back by not deploying funding and by ending subsidies, and allowing its commitments towards businesses (and the public) to go unfulfilled. Reversed trends in EV adoption among businesses are disproportionately detrimental to the UK’s environmental agenda, since business vehicles are more polluting than personal usage.”
