The UK Government plans to subsidise loans for drivers buying electric vehicles (EV) are “very welcome”, but it needs to go further, according to The Green Insurer.
The comment follows reports that the government is talking to car finance firms to try to increase the availability of low-interest or interest-free loans to help boost the take-up of EVs.
One option being discussed is for the government to underwrite private sector loans to reduce the monthly repayments to help bring the cost of buying an electric vehicle closer to that of petrol or diesel vehicles.
But research from The Green Insurer has revealed that scrapping Insurance Premium Tax on EVs. It found 36% of motorists would be encouraged to replace their current petrol or diesel vehicle for an electric model if the 12% Insurance Premium Tax were to be removed.
It also discovered 64% of motorists believed that the UK government needs to incentivise people to make
their next car purchase electric and just three in 10 (31%) owners of a petrol or diesel vehicle say
they intend to buy an electric or hybrid car when they next purchase a car. A further 34% saying they are “indifferent” about the type of fuel their next car will use.
In addition, the study showed 60% cited the higher cost of EVs compared with petrol or diesel models as a reason for not considering an electric or hybrid vehicle for their next car purchase. Reasons for not choosing were financial, such as the future cost of replacing the battery (52%); concerns around the cost of servicing (34%) and a belief that electric car insurance premiums could be higher (23%).
Paul Baxter, CEO, The Green Insurer, said:
“Subsidising loans for electric vehicles is a welcome move but it is needed given that sales of electric vehicles are below Government targets and shows more is needed to shift the dial.
“Scrapping or reducing Insurance Premium Tax on electric vehicles would be a straightforward way
to help encourage drivers to make the switch from petrol or diesel cars.
“It is a tax that’s added to all general insurance premiums and is set and controlled by the
Government. In the last decade it has doubled from 6% to 12% and scrapping it for electric vehicles
would be a good short-term measure to boost sales.
“By getting more new electric cars on the road we are building a stock of greener used vehicles for
the future. Scrimping on the environment is just something that we cannot afford.”
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