Electric vehicles (EVs) don’t come cheap but this mode of transport is fast entering the mainstream of motoring as petrol, diesel and even hybrid models are phased out.
Forking out anything from at least £28,000 for a vehicle has yet to prove it’s staying power with electric-tech evolving by day by day, so it could be a tough call for even the most forward-thinking of us.
There is a way you can put your toe in the water without tying yourself into a financial commitment you’ll later regret. For a relatively small deposit and affordable monthly instalments you can bag yourself a state-of-the-art set of wheels through the option of leasing.
Leasing maximises your spending power, helps you plan the costs of car ownership and gives you a regular opportunity to upgrade your vehicle. It is little wonder that the PCH market grew by 17pc year-on-year in the third quarter of 2019.
Approach the prospect wisely, making sure you can afford the deposit and keep up the monthly payments then you will soon be driving that brand new car of your dreams.
It is an agreement with a finance provide for to to pay a monthly fee which is usually between two and four years after which you will hand the car back. You can then choose a new model on a separate contract or walk away with nothing to pay. You will be expected to pay an initial deposit for the electric car and your monthly repayments will be based on the miles you expect to clock up each year.
This is going to be one of the most competitive markets in the very near future, especially in the light of the government’s ban on the manufacturing of petrol, diesel and hybrid vehicles by 2035. Work out what you will be using the car for.
Uber drivers, for example, often take the leasing route, giving them the opportunity to drive performance-based cars like the Tesla Model 3 at monthly payments they can afford. If you rack up the miles, go for a EV that has a battery that allows you to go a long way.
If you are an urban driver and power and performance isn’t your priority you should consider an EV with a less powerful motor. This will bring down your insurance costs. The Uber driver is going to pay at least a £1,400 annual insurance premium, whereas a Renault comes in at just under £400 yearly.
After a long period of seemingly endless doom and gloom, vehicle owners might be in for better news at the beginning of 2021. January next year sees the result of a proposal to end the practice of insurance companies ripping off their loyal customers, and offering better deals to newcomers, or those who switch.
In what has for years seemed a flagrant abuse of customer loyalty, insurers have hidden behind ill-defined regulations and small print, meaning it really doesn't pay to stay with the same company. Almost two years ago, Citizens Advice lodged a complaint with financial watchdogs to look into, and hopefully end, this practice. Now, it seems, the results of their efforts are soon to bear fruit.
The practice of increasing insurance premiums is known as "price walking". This refers to premiums starting off at a certain level and being "walked" up an increasingly expensive ladder. Basically, the longer a customer stays with an insurance provider, the more it will cost them. This situation is present in both home and car insurance; two of the most expensive items in the average person or family's life.
Initial reports by the Financial Conduct Authority (FCA) into Citizens' Advice complaint state that this state of affairs persists because insurers hide behind what it calls "complex and opaque" pricing policies. Thus, they are able to justify their behaviour by reminding their customers that they signed a contract agreeing to such practices. Whether any right-minded vehicle or homeowner would knowingly sign up to such a contract is, of course, highly unlikely.
In the opinion of the FCA, and no doubt millions of policy holders throughout the UK, the price of insurance should be based on risk, and nothing else. This is certainly the case for new or switching customers. Unfortunately, existing policy holders are charged more the longer they keep the policy; their risk does not change. In fact, no assessment is carried out after contracts are signed.
Taken together, home and car insurance is thought to cost the average, loyal, policy holder an extra £200 per year. As there are six million people who fit this category, that amounts to a massive £1.2 billion raked in by the insurance industry, simply by slowly increasing premiums and charging extra fees.
In September 2020, the FCA announced a package of measures to eliminate the practice of price walking. While there is no indication of how insurance companies will react to the proposals, the FCA predicts that they could save customers a huge £3.7 billion over ten years.
The FCA's proposals are based on sales channel. That is to say, any customer who uses a particular channel should be offered the same price on insurance for the same risk. For instance, if a potential new customer applied for car insurance via the internet, the price quoted should be the same for an existing customer looking for a renewal online.
Of course, businesses already charge different amounts depending on sales channel; usually it is cheaper to apply online than over the phone. However, under the FCA's new proposals, at least existing customers would not be charged simply for keeping their business with their current provider.
The sales of electric cars (EVs) are booming and within 10 years there will be a definite swing from fuel and diesel powered vehicles to these eco-friendly alternatives.
For some of us, however, the logistics of owning an EV is not as straightforward as we hope it can be. The biggest issue now is how to go about charging the battery, especially if we live in flats or terraced houses that don’t have off-street parking.
Those who have already invested in an EV are forced to run an extension lead, often across a pavement, from the car to their mains. This is not an ideal situation, making those of us who only have on-road spaces to think twice about buying a car which relies on electricity to power it.
Before you take the plunge and be one of the first in line to go fully electric, look at the charging aspect of this form of transport.
It is estimated that a third of UK households don’t benefit from off-street parking but most EV drivers want a home charger.
About 40 percent, not far off half, of car owners live in flats and houses where the installation of a home charger is not a viable option. This means using a domestic power source, which involves plugging into the mains. This is a slow option, compared to a public charge point. National Grid suggests building super-fast charging forecourts rather than undertaking a mammoth rebuild of our domestic electricity infrastructure to give us more power. This move, if it happens at all, won’t be in the very near future. So, in the meantime, those of us who don’t have private parking, will have to make do with running a cable from our homes, across a public thoroughfare to our cars.
There is a new power sharing scheme out there. The Co Charger app allows you to locate and hire a neighbour’s home charger at a set cost. This could be a part solution to the problem, but it will still require those who have home chargers to go to the Co Charger website and register.
From fuel prices to road tax it isn’t cheap to run a car these days and to add to this you have to have insurance.
Factors such as your age and where you live do affect insurance premiums, but there are ways you can reduce your annual outlay to cover yourself, your passengers and other road users in case of an accident.
You might not have heard of this before, but car insurance companies put vehicles into groups – one being the cheapest right up to 50 being the most expensive.
If you are driving a car with expensive replacement parts or has a powerful engine to make it go at top speeds, your car is likely to be in the double figures group and can cost the earth to insure.
Cars qualify to fall into the lower group dependent on their performance, safety and security features, value and part replacement costs. Cars like the Vauxhall Corsa, Nissan Micra and Volkswagen Polo score on the “less in more” board, putting them all into Group One. They all have impressive fuel economy and excellent safety standards.
So, the key factors are:
Your postcode. Working on theft and accident statistics in your area, your insurer will work out what you are going to pay on your premium. A 59- year-old Group 1 driver in Lincolnshire pays £288 annually for his 2016 Mazda2. If he lived in London, he would be paying almost £200 more.
Your age. The younger you are, the higher the premiums are going to be because anyone under 25 is more likely to through caution to the wind and drive recklessly. A 20-year-old living in London and driving a Group 1 care will pay double that of a 40-year-old, driving the same car.
Your mileage and driving activity. If you use your car for commuting to and from work and drive it socially too, then this will have an impact on your insurance payments. If you can keep below 8,000 miles per year, then you can shop around for some good deals.
Off-road or on-road. If you have off-road parking, especially in high theft areas, then you are on to a winner. Better still, move all that tat from your garage and use it for what it was intended for – a car. Having a lock-up garage will bring down your insurance premium.
Insurance type. Not so long ago third party, fire and theft insurance policies were taken up by those of us on a tight budget. This is not necessarily the case anymore. Do your homework on this one and you will most likely find that you can get a lot more for your money choosing fully comp.
The Government has been putting its money where its mouth is, by encouraging motorists to switch from fuel to electric powered cars.
Up until recently the government was offering a £4,500 subsidy for new EVs (Electric Vehicles) but a surge in orders has forced it to drop to £3,500. Subsidies for hybrids were also axed.
Despite this, more than 160,000 and counting are still benefiting from a good percentage of the purchase price of a new vehicle.
Not only is there a grant to help with the price of a new EV, but there is also the OLEV (Office of Low Emission Vehicles) grant of £500 towards the installation of home charge points for the car.
These grants aren’t exclusive to cars because the price of electric motorbikes and vans also benefits from subsidies.
If you are thinking of buying a new bike, why not consider going down the fully electric route because you can benefit from a government subsidy of £1,500.
You have everything to gain from switching to an electric bike. It is not only good for the environment, but it also has 100 per cent instant torque and requires less maintenance. It is lightweight, having less parts than a fuel powered model and has regenerative braking, meaning that it automatically recharges the battery when you apply the brakes.
If you rely heavily on a van for your work then when the time comes to replace it, look at an electric powered option for your next purchase. This investment could be made even sweeter with a whopping £8,000 grant from the government, slashing the costs substantially.
You probably clock up the miles in the work you do, resulting in high maintenance costs. With an electric van these costs will drop considerably over the lifetime of the vehicle. An electric-powered van has less parts to maintain and replace than traditional fuel-powered vans.
You can also look in to leasing a van, instead of buying one outright, especially if you use it only for business purposes.
There is talk that these grants are not going to last indefinitely, the government’s cut-back on its car grant is proof that there will come a time when new car buyers won’t benefit from these perks. Prices of new electric-powered vehicles will drop over time, no doubt, but if you are thinking of replacing your current set of wheels, take advantage of the current subsidies offered to buyers of EVs.
If you have paid your vehicle tax for the year, but it is currently off the road, sold or stolen, you can get a refund for any full months of remaining tax.
This is according to the Driver and Vehicle Licensing Agency (DVLA) who encourages drivers to claim the refund for all the full months of remaining tax.
If, for whatever reason, your car is standing in the driveway or tucked away in the garage, you can apply for a tax refund. To do this you will have to declare the vehicle SORN. This stands for Statutory Off- Road Notification.
As long as you don’t use your vehicle on public roads then you aren’t obliged to pay road tax or insurance on your vehicle.
If your car is out of circulation and parked outside your house in an on-road space unfortunately it will still be liable for road tax. If you are found not to have road tax you can face a fine of £1,000.
Selling a car with road tax for added and a disc the window is a thing of the past.
Under new rules introduced in October 2014, vehicle road tax can no longer be transferred to the new owner. The DVLA will refund any full months of tax left over to the previous owner. So, whenever you sell a used car, it will now always be untaxed.
Before paper tax discs were scrapped six years ago, there was a five-day grace period to allow for the new disc to arrive in the post. With the introduction of the DVLA’s new digital system, this doesn’t apply anymore. The vehicle must now be taxed at the point of sale, so you could be fined if you allow the new owner to drive off without it.
When you buy a used vehicle, the seller must you the green section of the logbook. You can tax the car at the Post Office using the 12-digit reference number on the V5C/2 form. Even easier, you can simply go online and do it on the DVLA website. Remember that if it is more than three years old you will also need a valid MOT. You cannot use the seller’s remaining road tax months.
You are eligible for a refund if your vehicle:
Once you have informed the DVLA (online is usually the best way):
If your refund doesn’t arrive you can notify the DVLA’s Refund Section, Swansea SA99 1AL to notify them. The same applied if your refund cheque is in the wrong name.
With more than 100,000 vehicles being stolen in the UK every year, the last thing you want is to become a latest statistic and have to go through the trauma of losing what could be one of your most valuable investments.
If you have forked out a large chunk of your hard- earned cash on buying a car then you could be forgiven for postponing extra features to your vehicle, but if simple measures can go a long way to stopping car criminals in their tracks.
Too many of us hide our spare keys in places where thieves can find them. Many of us hide the spare in places criminals will know exactly where to look. Getting locked out of our car is inconvenient, but not as much as finding your car gone. If you have a safe at home, put the spare keys in it and keep the safe secured and locked. Even with your car’s main key, don’t leave it on counter tops or hanging on the key rack. If, your home is broken into, it might not be just the laptop and PS3 they will be making off with.
Even if you park your car in the garage or on the driveway, get into the habit of locking it and making sure the windows are closed, even during hot weather. All crooks need is a car window that is open just a few millimetres and they will be in. If you have a family that includes young children, get them into the habit of winding up their windows before they get out the car.
When you park make sure it is:
Don’t leave any valuables in your car, especially if they are in full view. This might be something we know we should never do, but there are still many of us who will leave our handbags and wallets in clear view. It doesn’t matter if you are just stepping out of the car for a minute because that is all the time a car thief needs to smash a window and grab what ‘s on offer.
Make sure your car’s immobiliser is working and don’t ignore the digital alert on your dashboard. Don’t wait until the MOT is due, go to an electrical mechanic to have it seen too. All new cars have immobilisers as standard, but that doesn’t mean to say they don’t break down.
Many of us are mistaken in thinking that the government’s initial extension on car MOTs is still in place due to COVID-19 restrictions. This means you are using your car illegally on public roads and could face up to £5,000 for this offence.
Authorised MOT centres are now open for business under strict new guidelines in place to prevent the spread of the virus.
MOT centres’ staff guidelines
Guidelines for MOT test centre customers
Some MOT Centres have added a collect and return vehicle service for their customers to make it easier for us to comply with the law and have our vehicles MOT tested. It is worth going online to see if which centres near you offer this service.
If your vehicle’s MOT is going to run out and you are not able to get to test centre, then you can register it off the road or SORN until you are able to make it.
The coronavirus pandemic and lockdown of 2020 have seen many vehicle owners thinking seriously about selling their car, van or motorbike. This is often because they have had to garage or park the vehicles in question for months at a time, and are worried about them losing value. For owners of older vehicles, or those coming up to MOT, selling in this situation is a very reasonable response.
At the same time, however, there are practical concerns for sellers. Obviously, potential buyers will want to come and see the vehicle, look at its log book and MOT history, and take it for a test drive or ride. All of this necessarily involves some kind of physical contact. As we are advised that Covid 19 can live on hard surfaces for long periods, this can be a worry for potential sellers. As many of these are themselves older and perhaps vulnerable, selling safely is very important.
For anyone feeling particularly vulnerable at such times, many negative scenarios can present themselves. While, for instance, a seller may not want to sit in an enclosed space (like the passenger seat in a car or van) next to someone who is potentially infectious, this is almost certainly going to be necessary.
The alternative to being next to a potential buyer as they take a vehicle for a test drive is that they may just drive away with it. If they have given false details, sellers could be forgiven for thinking that's the last they'll ever see of their prized possession. As lockdown means being in unfamiliar situations, many people have had to trust strangers and institutions they wouldn't otherwise consider; selling a car can test this unusual level of trust to the maximum.
In order to allay these fears, potential sellers should do as much groundwork as possible before inviting someone to test drive their car. This means talking to them on the phone, or perhaps via video link if possible, to try to assess their intentions and character. If they offer details of a business they work for or own, this can be check out via online reviews.
While sellers should not divulge their own address, it's perfectly acceptable to ask for that of the interested party. In some cases, sellers who are particularly worried about close proximity to buyers can ask for their bank card, or even car keys, as insurance against theft; in this case, sellers may feel safe enough to allow a test drive unaccompanied.
For most sellers, however, accompanying the potential buyer on a test drive will be absolutely necessary. In this case, both parties should agree to ground rules, such as wearing of masks at all times, hand cleanliness, and perhaps the wearing of gloves. The seller can wash town touch points, such as the steering wheel, gear stick and door handles, and control buttons before and after the test drive.
While inside the vehicle, the seller should sit as far away as possible from the driver. This usually means in the rear, offside seat. (Of course, this won't be possible in two-seater models). While the buyer is in the car, windows should be left open to allow as much ventilation as possible; recycled air condition should not be turned on.
You only have to see the adverts from the auto world’s big players to realise that electric cars have arrived and are here to stay.
It is important to point out that despite this global drive to replace fuel driven vehicles with electric, the technology is still evolving, and new developments are being rolled out all the time.
Electric transport is the future there is no doubt about it, so what are the advantages of investing in this new-age form of transport?
The pressure is on for us to switch to a mode of transport that is not going to impact on the environment. At the moment petrol and diesel vehicles, even with the new emissions regulations, are not doing our surroundings any favours.
There are a staggering 38.4 million vehicles on UK’s roads and as a collective the emissions are having a negative impact on our environment. Emissions cause play havoc with our health and contaminate the land that grows our food.
Electricity is cheaper than petrol of diesel. Electric cars cost about 33 percent less to run compared to its fuel counterparts.
According to EDF it will cost you £2 to drive a 100 miles in an electric vehicle, whereas the same drive using petrol or diesel will cost £11.60.
An advantage of an electric car is that it’s much quieter than fuel driven alternatives because it doesn’t have an exhaust. Investing in an electric car means you will be doing your bit in reducing noise pollution.
It is also a benefit to those of us who have a top of the range audio system or hate having to compete with engine, tyre and wind noise when talking to our passengers.
In fact, electric cars are so quiet, it is required by law to install an AVA (Acoustic Vehicle Alert) System. This emits an alert to warn pedestrians when you are reversing or travelling below 12mph.
Other incentives for going electric
We know that lockdowns are going to be part of our lives until early spring at least or until the spread of COVID-19 is brought under control.
This means that all non-essential trade is closed to the public and although this includes car showrooms, it doesn’t mean that this applies to dealerships too.
Many major car dealerships are still open for online business and delivery. So, we might not be able to take a trip out to a dealership to browse what’s on the showroom floor or test-drive a car, but there’s still the opportunity of buying a vehicle you’ve had your heart set on.
Many manufacturers have invested heavily in stepping their online options up a notch to present you with remote buying features, where you can browse from the comfort of your sitting room.
On some sites you can set your own budget and even go as far as choosing a finance option such leasing or cash. Compare these just as a matter of interest, you might be surprised at what is on offer.
It is easier than you think configuring paint, trim, accessories and extra options online. There’s even part-exchange data and if lockdown is on the verge of ending, you can book a test drive at your local dealership.
If you need a second opinion, don’t leave it there in the virtual showroom, take a look at online reviews because you won’t be able to test drive it.
Find out which dealers offer a video call facility. This means they can take you around the showroom and provide you with the vehicle’s features on a “face-to-face” virtual tour.
Buying cars online has been around for a while now, so it’s not something new and has had at least five years to be tried and tested. An estimated 97 per cent of car buyers use the internet to help them make a decision and many have clicked the “order now” button.
In fact, you have more protection buying online than if you buy at a dealership. This is because you are covered by the Consumer Contracts Regulations brought out in 2013 that covers “distance selling” when something is not sold in person.
You can change your mind and cancel your order and have up to two weeks after taking delivery of the car. Buying in person from a dealer doesn’t give you the right to do this. So, in effect, buying online is in fact safer than buying in person.
You don’t have to go through the whole process of buying online, if you prefer to complete the purchase face-to-face. Under lockdown circumstances this is not possible, but if you aren’t in a rush you can save your proposed purchase until restrictions have been eased and car dealerships have reopened.
If you have taken the plunge and ordered the car of your dreams online, be assured that any reputable dealer with carry out due diligence by having the car delivered sanitised and the driver will be wearing a mask.
The buzzword on the roads is definitely electric and the aim is for this form of transport to become the only one in the next 20 years.
Investing in an electric car is has so many benefits from being kind to the environment and being kinder to your pocket in the long run.
You still have the option of driving fuel vehicle, as long as it meets the UK’s emission standards but at some stage it is highly likely you will be behind the wheel of an electric powered vehicle.
The benefits of driving an electric outweigh the drawbacks, but it is good to know what is in store for you when you do the switch.
Car companies are furiously working on way to make their electric models go further, but at this stage electrics have a shorter range than traditional vehicles.
An electric can achieve between 60 and 100 miles if it is fully charged. This is opposed to a fuel-driven car, which can run up to 400 miles on a tank of petrol.
It takes no time at all to fill up at the petrol station but recharging an electric’s battery takes time. It can take up to 20 hours to fully charge. More expensive vehicle models have far faster charge rates of about four hours.
Finding a public electric vehicle charging point can be frustrating, although councils and some companies are working on providing charge points in convenient places such as parking lots.
UK’s electric car charging point network will have to increase ten-fold to deal with increased predicted demand for electric cars in the near future.
Our prime minister Boris Johnson has caused a mild panic in the motoring sector by announcing a ban on petrol and diesel vehicles in 10 years’ time. The government has, however, pledged to invest £1.3 billion in its environmental drive. It plans the rollout of charge points in streets and on motorway service stations over the next 10 years.
The best way to eliminate any frustration is to have a dedicated home charger point installed at your home. It is faster than the conventional public chargers, it is waterproof and can be mounted to a wall. You have the benefit of charging your car overnight when the electricity tariffs drop from 14p per kWh to 8p per kWh.
There is a grant of up to £350 provided by OLEV, the Office for Low Emission Vehicles. This means that you can have a fully installed home charging point for under £500, depending on what charger you choose.
Fully electric cars at affordable prices are currently thin on the ground, although manufacturers are working around the clock to produce models that are fully electric. Most will be hitting the showrooms in spring. The price of an electric model is relatively high, starting at about £28,000. The average price seems to be in the £50,000 range, which is out of reach for many of us.
There is the Peugeot e-2008, available how, starting at £28,665. It is an SUV with a single electric engine that has a 193-mile capacity.
Available to order is the Polestar 2, which starts at nearly £50,000. It does have twin electric motors and uses a super-strong battery that claims a range of 292 miles.
The government recognises that the cost of these new vehicles is high, which is why it offers a £3,000 grant off certain electric car sales.
The number of untaxed vehicles on the UK’s roads has trebled since the tax disc was scrapped in 2014, according to the Department of Transport.
Up until six years ago motorists had to clearly display tax discs on the windscreen of their car. Since the DVLA (Department of Vehicle Licencing Agency) has gone paperless, thousands of motorists think this makes it easy for them to get out of registering their vehicles with the DVLA.
Not everyone knows that the DVLA is all-seeing and it won’t be long before you are pulled up for using your untaxed vehicle on public roads. It relies on city centre and motorway cameras and police to expose offenders. Driving an untaxed vehicle carries a £1,000 fine.
There is still a certain amount of confusion when it comes to taxing a vehicle and here are some of the most common issues that crop up on this issue.
If you aren’t driving the car and it’s out of circulation, then you don’t need tax it. You do, however, need to declare it SORN (Statutory Off-Road Notification) to be eligible for not paying road tax. You can do this online free-of-charge by filling out the V890 form.
Your car must be parked on private land, like on your driveway or in the garage. If you don’t have off-road parking and you leave in a space on the street outside your home, you will still be eligible for road tax. If a traffic warden picks this up and does a check you are in for the high jump.
Driving a SORN vehicle is a more serious offence than driving out tax and the penalty is £2,500. serious offence than purely driving without tax. The only time you can drive a SORN vehicle is when you are taking it in for a pre-booked MOT.
Vehicle tax can no longer be transferred to the new owner. The DVLA now refunds any full months of tax left over to the previous owner. The vehicle must be taxed at point of sale and you can be fined for driving off without it.
You need the New Keeper Supplement or V5C/2 green section of the logbook to tax it either at the Post Office or easier still, online.
In a year dominated by a massive economic downturn due to restrictions enforced to halt the spread of Covid 19, UK Chancellor of the Exchequer Rishi Sunak had some bad news for many Britons. Pay to be frozen for millions of public sector workers, and no extra help for businesses stuck in Tier three restrictions were just two items of such news.
Hidden among all the negativity, however, was one much more positive announcement; a £12 billion infrastructure budget, to improve the road network and boost the UK's commitment to electric vehicles. Part of the top line figure is a £1.3 billion investment in charging points, and nearly £600 million promised in grants for people to buy zero or almost zero emission vehicles.
Having announced that the British economy is at its lowest ebb for three hundred years, this massive commitment to infrastructure investment might seem slightly surprising. Mr. Sunak's reasoning, however, is that investing in tangible projects now will help the country out of its economic crisis in the long term.
More specifically, the Chancellor has said that the spending will lead to the creation of 40,000 new jobs in the next ten years. These will be jobs in established industries such as road building, but also in growing sectors which will be needed to establish the UK on a greener future going forward.
That the announced investment is geared towards environmentally positive industries is part of a larger piece, as previously alluded to by the Prime Minister. Recent announcements from No. 10 have cited a "green industrial revolution" as being the way for the UK to make its way into the middle and latter parts of the 21st century. As it was here that the original industrial revolution took off, this is hoped to strike a chord with British workers; perhaps especially, those currently redundant or worried about their businesses.
For green campaigners and anyone else worried about the future of the environment, the spending review is also good news. As well as the boost to the new job market, Sunak also predicted that his investment target would lower the UK's carbon dioxide emissions by a mighty 300 million tonnes by 2030.
As well as economists and environmentalists, Chancellor Sunak has also struck a positive chord with the industries who will implement his changes, and spend the nation's budget. Business owners in the road building and civil engineering sectors have reacted very well to the announced investment plans.
As one industry insider pointed out, building and maintaining the UK's network has changed over the last few years, and will have to continue improving. In particular, materials used will have to be sustainable sourced, and maintainable at as low a cost as possible. Every closed road means diversions, economic loss and extra carbon emissions.
It is hoped, then, that the focus on a sustainable infrastructure as outlined by the Chancellor will become the new normal in rebuilding the British economy.
2020 will be remembered as one of the most challenging in the history of the UK’s motor manufacturing industry. A number of factors have converged to form a perfect storm for one of the country’s last manufacturing bases. While some of these factors could not have been predicted, however, there are further challenges to come; some sooner rather than later. As company owners try to remain bullish, there are already signs that production and sales levels are being severely hit.
The raw numbers are revealing. In October 2020, 25,500 fewer cars were made in UK factories than for the same month in 2019. That represents a drop in production of 18.2% from last year; or, nearly a fifth. As with much of the UK’s manufacturing output, exports make up the bulk of sales for new cars; and it was indeed foreign markets which showed a dramatic decline in demand.
In particular, dealers from Europe and the USA stopped buying British cars more than any other foreign customers. In both cases, demand fell by about 26% year on year. To be hit by a drop in sales to one’s important customers by more than a quarter is quite a blow for any business.
Sales for domestic customers also fell by 13.5%. More positive news came from the far east: Japanese sales rose by 57% and those to China by 9.7%. However, this only partially disguised that headline drop in production of 20% for the same period in 2019.
Of course, the main reason being cited for this drop in demand and production is the Covid 19 pandemic and consequent measures to halt its spread in all parts of the world. No business forecaster could have predicted these events, so car manufacturers will be hoping to recoup losses when the world gets back to some sort of normal; perhaps people will treat themselves to a new car, after months of idleness and depreciation for their current vehicle.
However, two challenges face the UK’s car manufacturing sector; one in the short term and one further down the line. The first one is due to hit in 2021, and its consequences are not yet known; the outcome of any final Brexit trade deal. The second is the government’s announcement that no more petrol or diesel cars will be sold in the UK after 2030.
Manufacturers’ leaders have reported that the UK car industry faces a potential loss in business of £55.4 billion in revenue, if a trade deal is not agreed with the EU and the country is forced to trade with the bloc on World Trade Organization terms. While some manufacturers will be able to absorb their share of this loss in business, it is by no means certain which ones; as for smaller manufacturers who rely on European or US sales, such a future would likely mean closure.
Further down the line lies the end of sales of new petrol and diesel vehicles from 2030. Industry leaders have already strongly urged the government to implement a robust strategy to ensure UK car makers are in at least a reasonable position to rise to this challenge.
In both the short and long term, then, the challenges facing Britain’s car makers look certain to continue.
The seemingly relentless expansion of the market for electric vehicles has been gathering pace over the last few years, and this situation looks set to continue. With the UK announcing that it will ban new petrol and diesel motors from 2030 - ten years earlier than previously stated - and still playing catch up to other European countries, that continent has been at the forefront of electric car takeup.
As part of this European momentum, big guns Tesla had been making great strides on that continent. In fact, until recently, Tesla had been the market leader in Europe. That situation has now changed. Not only that, its plans for a massive new factory in Germany have also started to encounter problems.
The first piece of bad news for Elon Musk in Europe is that Tesla are no longer the leading sellers of electric vehicles there. That position has now gone to Germany's own Volkswagen; with credit for this lead widely given to its introduction of the ID.3 EV. Years of research and investment by VW are now starting to pay off; and the fact that it's a home grown brand is a particular help in the German market.
Perhaps with a view to establishing itself as a "German" manufacturer, Tesla have begun work on a huge manufacturing plant at Grünheid, about 20 miles from the national capital city of Berlin. Work on the plant has proceeded at breakneck speed, and Tesla expect it to reach a capacity of half a million vehicles per year in the fullness of time. This will, of course, be good news for the local economy, not to mention Germany's GDP.
As well as building a factory to produce electric cars (specifically, the Model Y to begin with), Tesla also included in its plans a facility to make batteries. This facility is so large it has been nicknamed the "Gigafactory". The factory's foundations have been installed, and the shell of the building erected. However, construction is not progressing as smoothly as the company would like.
This is because there have been a number of planning objections launched, largely on environmental grounds. In fact, any work still being carried out at the facility is only doing so because advanced permission was given months ago. That included clearing a huge area of pine forest; this has perhaps served as warning to the local population of things to come.
Perhaps ironically for an environmentally friendly car producer, its Gigafactory has been put on hold for exactly those reasons. In particular, the amount of water needed to run a battery factory of Tesla's dimensions is eye-watering; so much so that local people fear their own water supply will be restricted when the factory is fully functional.
Not only that, but a paint plant planned for the site has caused a lot of environmental concern. This would involve paving hundreds of hectares of land which currently drains safely into local water courses.
All things considered, Tesla may have to wait rather longer than July 2121 for their new German production lines to start rolling.
Many welcomed the recent announcement by the UK's prime minister that the sale of new petrol and diesel powered motor vehicles was to end in the country after 2030. This signalled the commitment of future governments - of any colour - to Britain's stated target of net zero carbon emissions by 2050; it also brought forward an initial date by a full decade. More recently, investment in greener infrastructure has also boosted hopes for a sustainable yet prosperous future for the country.
While this commitment has been greeted by widespread approval, from green groups to business, one detail has not been advertised so loudly; the drop of taxes which the UK's Treasury will receive when petrol and diesel motors no longer power much of the country's road fleet.
The fact is that tax on both of these fossil fuel variants currently bring in an awful lot of money to the Treasury in the form of taxes. Once the balance begins to swing significantly to electric vehicles, this money will, literally, dry up. Not only that, but electric vehicles do not qualify for vehicle excise duty road tax; and, of course, petrol and diesel are liable to VAT, which electric charging stations are not.
All in all, when the 2030 ban starts taking effect, the Treasury is looking at a drop in receipts of £40 billion per year. For a government committed to a sustainable future, this would seem to knock a great big hold in their claims that going green can be good for public finances.
As any future Chancellor will be loath to divert funding from other sectors to make up for the fall in motoring revenue, there is inevitable pressure to find money from another part of the sector. This, it is reported, means the revival of road pricing as an alternative.
Currently shelved after being touted by more than one previous administration, Westminster rumours seem to be suggesting that senior government ministers are now seriously taking road pricing off that shelf and dusting it down. In fact, the Chancellor himself, Rishi Sunak, is said to be giving the matter some serious consideration.
Of course, whether Mr. Sunak is still in government after 2030 is a moot point; but the fact remains that road pricing would present an attractive option to future Chancellors once petrol and diesel sales have plummeted.
This situation gives current and future politicians a period of ten years to design a workable plan for road pricing. There are many within the business community who will never like the idea; this potential for loss of votes and support will have to be factored in by whichever party is there to manage the transition.
A ten year gap does have its advantages, however. Technology is likely to have produced a wider choice of options to make road pricing relatively painless to implement, for example. While privacy issues and potential litigation will be a brake on too high a level of vehicle movement monitoring, ANPR is already widely used, and could be adapted to work on particular road systems.
Whatever the case, it seems likely that the British motorist may have to get used to talk of the revival of road pricing as 2030 gets closer.
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