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Time to get Britain motoring in electric car market

British people are still not buying electric vehicles to the same extent as other Europeans and Americans are – but there are a number of steps the government could take to boost demand, says think-tank

Around the world, governments are responding to the threat of climate change and the rising costs of imported oil and gas by tightening regulations on vehicle emissions. Countries and regions representing two-thirds of the global economy – including the United States, China, the European Union, Japan and Russia – have now introduced these standards.

Over the last decade, the United Kingdom has once again developed an elite export market in the motor industry, becoming the fifth best exporter of cars in the world, and British-based firms are innovating to keep up with changes in global rules. Unfortunately, Britain is falling behind in the domestic market. British people are still not buying electric vehicles to the same extent that other Europeans and Americans are.

However, companies based in the UK – like Nissan, Honda, and Jaguar Land Rover – need to sell some of their cars at home for the UK to remain an attractive place to do business. Ensuring that we create a domestic market in electric cars is therefore essential to the future of our motor industry. The Institute for Public Policy Research’s new report, Leading the charge: Can Britain develop a global advantage in ultra-low emission vehicles, shows figures for the last two years in Europe.

The French and Norwegians bought the most electric vehicles while, as a proportion of total car registrations over the same period, Britain ranks just 15th amongst its European neighbours. Action must be taken to increase sales of electric cars in Britain immediately. The public sector has a key role to play in providing infrastructure and usage benefits and also in buying a large number of cars itself.

With regards to procurement, research conducted by the Energy Saving Trust shows that government financial support and lower running costs can make an electric car cheaper over its lifetime than other vehicles. For example, by purchasing a Nissan LEAF rather than a Ford Focus Zetec S, a public sector owner could save £3,755 over a four -year period. The employee driving the vehicle would benefit from savings of £5,197 over the same period.

We therefore recommend the introduction of a new government buying standard mandating that the fleet average for all new cars procured by central government should not exceed 95g CO2/km by 2020, with this target being phased in over time. Local authorities should also look into buying electric vehicles and take advantage of the economic opportunities they offer.

In relation to the private sector, the UK government has cut support for businesses wanting to buy electric cars by withdrawing 100 per cent first year capital allowances to leasing companies. Some 58 per cent of new cars are bought by businesses, with many of these purchases being leased cars. Furthermore, 66.5 per cent of consumers buy new cars on a lease. We therefore call on government to reverse this policy change.

Meanwhile, usage incentives give drivers of electric vehicles rights that other drivers do not enjoy, such as driving in bus lanes, free parking, and free use of toll roads. In the UK, different councils have experimented with different incentives, but IPPR’s research has found that a uniform approach across large regional areas could boost demand, as this is what tends to be occurring in countries where sales of electric vehicles are higher.

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