EV owners without home points pay more tax
The latest news from the world of electric motoring
Good morning and welcome back to The Fast Charge, the newsletter that will plug you into the latest in electric motoring.
Quite a jam-packed newsletter to take you into the weekend today. From Will Ferrell taking the fight to Norway to an ongoing battle in Warwick.
In my long article, I’ve analysed the price gaps between public charging stations and owning a home point. What I found is that not only can it be five times more expensive to use public charging points, but people without a driveway are getting taxed more as well.
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In the news…
TOP MARKS: The rise of EVs continues in January 2021 as the UK market for plug-in sales reached 13.7% market share. That’s 2.3 times higher than last January. According to CleanTechnia.com, typically January is the worst month for plug-in sales, so the fact sales are already so high could be an indicator of the rise to come throughout this year.
GO LOW: The UK government’s Go Ultra Low electric car campaign will close next month after failing to secure additional funding. Arguably it has been a success, given EV sales rising, but how directly that’s linked to this campaign is questionable. The closure of the campaign comes as the UK’s Government Communications Service centralises its campaigns and reviews its projects - which was kicked off last Summer by Downing Street. The long-term aim for No10 is to be more mayoral and to only run a few campaigns key to the Prime Minister.
NOT FOR PROFIT: The British oil company BP has claimed its not yet making a profit from its electric charging stations. That’s despite owning nearly 10,000 of them. Perhaps understandable, installation is a high initial cost and, likewise, just two years ago BP paid a multi-million-pound sum to buy Chargemaster, a huge charging company at the time. BP claims it’s making most of its money through energy supply. Perhaps as BP heads towards its target of building 70,000 charging stations by 2030, some profit will be realised.
KOREAN FRUIT: During the middle of this week, Kia Motors stock jumped by almost 14.5% following reports that Apple is lining up to invest $3.6 billion as part of a collaboration to make electric vehicles. Although, over the last few years it feels like there have been endless ‘reports’ that this will happen. This time it certainly feels like a deal is close but don’t hold your breath, apparently, production might not start until after 2024. Read a little more.
NO WAY: This week on ‘Did You Know General Motors Are Making EVs’ the company has released a new advert featuring actor Will Ferrell. It’s titled ‘No Way Norway’ and is due to be played during the Super Bowl on Sunday. In the advert, Ferrell outlines that Norway is out ‘EVing’ America and that he wants to ‘CRUSH THEM’. This is despite Ferrell initially standing in a room covered in Norway flags, maps and trinkets. The advert is true Ferrell, overdramatic and loud comedy. What I find more interesting though - not featured in the advert - is that Ferrell does actually drive an EV and has done for over a decade. Not a total sell-out then.
LISTED BUILDING: In December, Coventry was named the best place to own an EV. Since then it’s been named as the location for the first ‘flying car airport’ and been host to a number of exciting electric car trials. However, 8 miles down the A46 in Warwick, things aren’t so positive. It currently has just under 10 charging points listed. And, although the council is planning to install more in the town centre, now councillors and residents have kicked off. They have claimed that much of central Warwick is historic - it’s a heritage site - and that the points should be installed elsewhere. While there may be a good reason to protect these streets, given how many of Britain’s towns are ‘historic’ it will be interesting to see what they decide.
GOOD IDEAS? The Think Tank Bright Blue - which has close links with the Conservative Party - released a paper this week making recommendations on how to encourage further EV takeup. It includes some interesting recommendations, the ones I found most interesting were:
Increasing the UK’s plug-in grant from £3,000 to £5,000 and introducing a £2,000 grant for people buying second hand EVs. While a nice idea, I do wonder if dumping money into grant scheme is the right way to go? 75% of all car purchases nowadays are leases - often lasting 36 months - meaning most people don’t buy based on the total sum but a monthly one. By adding more of a discount, surely people will just take out leases on more valuable EVs - perhaps out of their price range - and they won’t even own it.
Making public charging companies interlock with each other - essentially making it easier for users to access points without downloading new subscriptions each time. This is a lovely idea but the government hasn’t done this in the past for other services like car parks, so would be difficult.
Getting oil companies to install rapid chargers for electrics in all their petrol stations above a certain size by 2023. This is so current ICE drivers will have familiarity with the network. Probably a sensible idea, though the government will have to start by tearing down the hopeless Ecotricity charging tech already in place by many motorways.
Two policy areas I thought it was interesting Brightblue didn’t focus on were scrappage schemes for current ICE owners or how taxes could help switch people. Quelle surprise. You can read the full report here.
Level the playing field for EV owners using public points
One of the main reasons to own an electric car is, not only are you helping save polar bears, but it’s also cheaper to run. That is, however, unless you don’t have off-street parking.
Near my home in London, driveways are an absolute rarity. Not even the richest of the rich near the streets of Knightsbridge get one. And this means, for EV owners, you have to rely very heavily on public charging infrastructure.
The number of people across the UK who don’t have off-street parking is thought to be around a third. So pretty soon potentially millions will be battling out for charging spots.
Obviously, the government being all-wise has foreseen this, which is why they are dumping millions into helping local authorities grow their networks of public points. However, there are questions about whether there will be enough. Two lamposts on a street with 40 cars could be challenging.
But, while everyone worries about infrastructure, there is a bigger gap growing.
I’ve pulled out a spreadsheet and analysed* the costs of major public charging companies versus the major EV tariffs for people with home points. The gap is quite startling.
For example, if you had an EV with a 40 kWh battery - which is an increasingly common level - and you needed to charge it by 80% (no one ever charges using 0-100%), for people blessed with the ability to install a home charging point it would cost on average about £5.50.
However, for those using public charging, it would cost on average around £12.42.
In the worst example, a homeowner using the very popular Octopus Go tariff might only pay £4.48, meanwhile, a flat owner having to use an Open Source charging station would be hit with a £23 price tag. That’s five times more expensive!
And the cost for homeowners could soon get cheaper still as energy companies try to price each other down. Such as Ovo who plans to only charge 6p per kWh.
It surely must be a concern that as EV sales grow, for people with a driveway it’s going to get cheaper whereas for those who don’t it could get more expensive?
Yes, you would assume that as more public points get installed then charging companies will have to be more competitive; however, that could become the opposite.
Charging companies will be able to dominate areas leaving no viable alternatives than to use the charging stations nearest to your home. And companies know this, what’s to say they don’t slowly increase prices? They need to get a return on their investment after all and, as BP has said this week, profit is obviously the long-term goal.
Unless the government subsidies charging point usage, I can’t see how they would get cheaper for people without off-street parking.
However, there is one solution that could slightly help lower this EV price inequality before its begun…
Did you know that, if you charge using public infrastructure you’ll be taxed at the standard 20% rate of VAT? However, if you charge at home, you benefit from a reduced 5% of VAT, meaning your costs are brought down.
This is because the electricity you’re provided in public is sold as product/service and therefore taxable to the full amount of VAT. Whereas, domestic usage gets a discount.
HMRC has a full factsheet on it here.
This is yet another example of a price wedge being driven between those with off-street parking and those without.
Based on my analysis, this VAT gap can mean in real money terms an EV owner paying up to eight times more in tax for using public charging stations than their driveway counterparts. The difference is only 15% but because of the cost difference for using public charging is greater the VAT grows too.
As Chancellor Rishi Sunak prepares to raise fuel duty in the Budget, let’s hope that he also flattens this difference in VAT. It absolutely has no impact on charging companies but will enable consumers relying on public chargers to be on a level field with home users.
By Tom Riley