Budget analysis: The Good, Bad, and Ugly
What can EV drivers and businesses expect next week?
Hello, I’m Tom Riley, and welcome back to The Fast Charge, a British EV newsletter.
Apologies that this one arrives on a Sunday. I‘ve been very squeezed for time this past week, and I didn’t want to provide a thin update. Especially on a topic so important... the upcoming Budget. Dun, dun, duhh!
I provide my analysis on what the EV sector may expect next Wednesday.
In other news... the new Nissan Leaf has been added to the grant scheme, and Octopus EV’s funding swells to £2bn.
As ever, if you have any comments or feedback, please reply to this email or message me on LinkedIn. My next edition will be on Thursday 27th (post-Budget).
Budget 2025: What can EV drivers and businesses expect next week?
Summary: This coming Wednesday, Chancellor Reeves will deliver her Budget to a terrified audience. That is, everyone in the UK. Like a game of Russian Roulette, we all know she must collect up to £30 billion from somewhere; it’s now just a question of which people the Treasury’s bullet is going to hit.
And on that cheery note... For today’s edition I’m sharing my analysis of what the EV sector and its drivers may expect out of the Red Box. To inform this, I have spoken to and read updates from numerous sources. I have decided to tier expectations by... The Good, the Bad, and the Ugly.
👍 The Good
New funding for the EV sector 💷
It was announced this Sunday morning that the government is going to invest an additional £1.3 billion into supporting EV sector growth. Part of that money will funnel into the Electric Car Grant pot, with about £200 million going to support the rollout of charge points. We can also expect a new consultation on Permitted Development Rights, as part of the government’s previous support for installing channels across pavements.
Relief on Business Rates for charging bays 😮💨
The Valuation Office has been warning charging networks in the UK that, from April 2026, business rates will apply to EV charging bays. The charging industry has claimed this move will cost the industry upwards of £100m a year in new costs and has been lobbying the government hard to find a solution. According to a couple of industry sources, they believe that the introduction may be kicked back some years, as otherwise it’s going to seriously stifle growth of public chargers up to 2030 – the government's original target is to have 300,000 available chargers by that point, which is still 210,000 in the distance.
Changes to the Expensive Car Supplement 🚙
As of this year, EVs have become eligible for Vehicle Excise Duty, which has meant buyers of cars priced at over £40,000 are also required to pay the Expensive Car Supplement. This equates to an additional £425 annually from the second year of purchase to year five. It’s a huge turn off, and it impacts a lot more EVs than you think, even those eligible for the UK grant – which are meant to be affordable (see my post here for details on that). Across the industry, there’s been criticism that the ECS is set too low, and there’s hope that it will be raised to £50,000 or even £60,000.
At the end of September, a DfT spokesperson told me: “The Government recognises the disproportionate impact of the current VED Expensive Car Supplement threshold for those purchasing zero emission cars. We will consider raising the threshold for zero emission cars only at a future fiscal event to make it easier to buy electric cars.”
Dedicated spending to the police 👮
It’s a minor positive in the grand scheme of things; however, at the recent Spending Review, the Treasury did promise to boost funding for police by 2.3%, meaning 13,000 more officers on the frontline. With the increasing concerns around ‘lawless Britain’, my guess is any available money will be directed into the Home Office. I mention this given the ongoing threat of vehicle and, increasingly, EV charging cable theft across the UK. In my recent piece on charging cable theft, the Home Office suggested it was a growing area of focus.
Motability Scheme to be reviewed ♿️
This has been discussed by Labour for quite a long time, following a backlash against the scheme in March. It’s been suggested that the Treasury will remove the VAT exemption on Motability vehicles at the Budget, though some media outlets have since argued these plans have been abandoned. Personally, while I believe this move will make cars sold through the scheme higher for all people who benefit, whether for right or ‘wrong’ reasons, I do believe it misses the real task of reviewing who is eligible for Personal Independence Payment, which faced a huge backlash from backbench Labour MPs when it was initially mooted.
Then, Tom, why is this in the ‘Good’ column? I hate to be the one to say it, but Motability needs serious reform. The scheme is simply too big and has allowed itself to get fat. Critically, its EV strategy appears chaotic, and they seem unwilling to use their scale and weight – both with businesses and government – to stand up for disabled drivers.
At present... It’s suggested that one in five new cars in the UK is bought by the scheme, which more than 800,000 people now use – their customer base grew by 170,000 in 2024. It’s been well documented that many new joiners may have been misusing it. However, my real confusion with Motability is that its strategy seems based on pushing its customers into EVs, even though this user base should really be the last group to transition.
Additionally... I’m yet to understand where they are going beyond what other groups are doing for disabled drivers. Yes, they’ve developed a nice concept EV and make investments into innovation. But, surely you can’t be in the phase of working out whether a technology works for your customers while also concurrently pushing them to use it? It doesn’t stack up for me. As much as I think Motability has been a huge success for unlocking freedom for disabled people, if they want to benefit from the taxpayers’ pocket, they need to do more. It’s not enough, for example, to just sponsor charge point guidance and moan when it’s poorly implemented - why not sponsor real locations? I hope the Budget reminds Motability that they need to start leading, because the 2.7 million disabled drivers and their families are going to be stuck if they don’t.
👎 The Bad
VAT equality between home (5%) and public charging (20%) ⚡️
It’s a request by the EV sector at every fiscal event, and each time it’s never materialised: equalising the VAT applied to domestic charging and those using the public network. I’m not entirely hopeful that this year will be any different. The only way I could see this happening is if it’s framed in the context of the future ‘pay-per-mile’ tax and making it equitable for all drivers.
Reducing VAT on energy bills ✂️
It’s been suggested that the Chancellor may be looking to cut VAT on domestic bills from 5% to zero. It’s estimated this would save the average household £80. Leaving aside how utterly stupid the idea is, it would also make the current gap (as written above) between those with and without driveway charging capability even larger. Sadly, it does look like it may happen as Labour seeks to meet their election promise of saving people £300 on bills.
🥴 The Ugly
Pay-per-mile pricing 🚗
Further to my update last week (Pay-per-mile tax: Three reasons why the time is right), a lot of you agreed that this Budget is probably the right time to discuss and introduce this tax. And, as far as I can tell, there is still a plan for the introduction at this Budget. The reason I’ve put this in the ugly pile is that, clearly, the key to getting this new tax right is the design and implementation.
At present, there is talk that the pricing will be set between 3p and 9p for every mile driven, depending on how much a car weighs. Given this week, the BBC’s Theo Leggett was looking for case studies on ‘people who own SUVs’, I do wonder if the Beeb is preparing for a story like this.
After my piece last week, I learned a little more about when the New Zealand Government introduced something similar in April 2024 and made a bit of a dog’s dinner of it. In short, the learning for us in the UK is that the tax needs to ensure it doesn’t accidentally make hybrids cheaper to run compared to BEVs. James Foster, from EVDB in New Zealand, kindly shared with me his calculator that demonstrates the disparity that exists in NZ because of the poor implementation, which has led to their BEV market share remaining stagnant at 4-6%.
Fuel duty 🛢️
My personal view is that the Chancellor should really unfreeze fuel duty and remove the temporary 5p cut on each litre, which has been offered since 2022. And, given it’s now thought Reeves will NOT touch the main rates of income tax, it is possible she may do this.
However, for a Chancellor who will want to end next week still as Chancellor, the headlines after pulling such a move would be extremely negative, and likely play straight into the hands of Reform UK.
I really do not know which way it will go. Several sources have told me they expect fuel duty to change, but then others say ministers have told them it will not. Perhaps, as a halfway house, the Chancellor will ‘consult’ on removing it – that might be a good signal for economists and provide Reeves a degree of control for when to break the bad news. She could even wrap it up alongside a consultation on road pricing.
Rising grid fees 🔌
As a final policy to go in the ugly column: reducing standing charges and grid fees. A recent report by Bloomberg revealed that fees projected for 2029/2030, as of last April, are up to 180% higher compared to the latest projections. This follows a recent ChargeUK report that suggests standing charges have grown 462% in some cases in two years.
It is important for operators because it means them having to fork out tens of thousands more to run each EV hub. For drivers, the result is that they ultimately have to pay higher prices at the charge point.
Tom Hurst from Fastned told me the Treasury needed to ‘tame’ the fees. “We’re at a critical point in the transition. More and more drivers are switching to electric, and need high quality and reliable charging. Now is the time for government to back the charging industry not hamper it.”
This is a view shared by many. However, will anything be done about it by the Chancellor? Especially given that the Bloomberg journalist himself posted, “I’m shocked it’s not making more news”. Well, according to a briefing this weekend, it is something the Treasury is investigating.
A government source has said: ‘We know the price of public EV charging has risen in recent years so we will review the cost of public charging to report back by Autumn next year. This will look at the impact of energy prices, including wider cost contributors, alongside options for lowering these costs for consumers.’
It’s positive to see this; however, clearly, it’s been punted into the long grass, as it will be at least a year before anything is introduced to solve this. That timeline may be too long for many networks and investors.
👉 Agree, disagree, or think there’s one I have missed? Drop me a note.
Latest EV news...
💷 The new British-made Nissan Leaf is the latest EV to receive the full £3,750 electric car grant from the government, making the final price £32,249. See here. Interestingly, when I recently analysed ministerial meetings, I found that the Prime Minister, alongside former Business Secretary Jonathan Reynolds, had spoken to Nissan “to discuss Nissan’s operations in the UK” in late June this year. This was the same day that Nissan announced it was cutting 250 jobs in Sunderland.
🔌 Related to this, Pod, the charging company, is partnering with Nissan to offer buyers a half-price offer on their charge point subscription. Learn more.
🤖 Google is bringing its Gemini AI to its navigation system. I understand this means any EVs using Google Maps will therefore benefit. It sounds like it could make directions a bit easier. For example, rather than your system simply annoucing ‘take the next right in 300 yards’, it’ll ironically be a bit more like a human being, saying things like, ‘take the next right after the Red Lion pub’. Learn more.
🤑 Octopus Electric Vehicles announced last week that the banks backing it extended its funding to £2 billion to grow its book from 40,000 cars to 75,000. That’s the spin anyway. Read more.
⚡️ Last week, the new trade group Electric Vehicles UK went live with which carmakers were backing it, which includes Polestar, Volvo, Tesla, Chery, Omoda, Jaecoo, and Changan. Plainly, very Chinese/new brands compared to their main competitor, SMMT, which represents predominantly European OEMs. In EVUK’s first press release, they called for the Government to resist making further changes to the ZEV Mandate. Read more.
🌳 Transport for London, which was due to end the Cleaner Vehicle Discount for EVs from next year, has announced it will meet campaigners halfway. Instead of totally removing, from 2 January 2026, there will be a 50% discount for electric vans, HGVs and quadricycles registered for Auto Pay, and a 25% discount for electric cars registered for Auto Pay. Following this, a second phase planned from 4 March 2030 will see the discount reduced to 25% for electric vans, HGVs and quadricycles, and just 12.5% for electric cars. Read more.
📱 The AA has partnered with Zapmap. This will mean members of AA – that is, the motoring organisation – can use their AA app to access Zapmap’s charge point data, including real-time availability. Learn more.
Thanks for writing this, it clarifies a lot. I'm truely wondering if this positive news for the EV sector will offset the wider budget challenges you discussed in your last update?
When I look at Octopriceuk it's very noticeable that the standing charge on Agile tariffs is much lower in the richest area of the country. It's very hard to justify a variable rate especially when only London benefits.
This would partly explain the better charging infrastructure there.