EV tax could put brakes on electric transition

BUDGET 2025: Schneider Electric’s Kelly Becker is concerned tax on EVs risks slowing the growth of both EV and electric charging markets

The UK is making significant progress towards net zero transport with taxpayer subsidies helping to boost sales of EVs. Those financial incentives make EVs a more attractive prospect for drivers, which is why it’s important the government has extended the Electric Car Grant by another year. 

Although, the £1.5bn package to continue subsidising EVs and helping to increase the number of reliable charging points nationwide, is offset by the decision to introduce a new mileage tax on EVs and plug-in hybrids. 

We appreciate the need to replace the revenue lost by fuel duty but introducing a tax on EVs at this stage risks slowing the growth of both the EV and electric charging markets while both are still very much finding their feet. It also sends mixed messages to motorists looking to make the switch to electric and could even make EVs less financially attractive. 

We welcome the subsidies and the additional investment in charging infrastructure, but any slowdown in EV sales would create uncertainty for the automotive, EV charging, electricity network, and low carbon supply chain industries, reducing the ability to plan for future demand.

Taxation will be inevitable as the EV market matures, but for now, the UK is still building out the essential infrastructure and charging networks needed to support widespread EV adoption. Focus should remain on encouraging investment and growth to accelerate the move to clean transport. The government has an important role to play in supporting adoption and helping to ensure a smooth transition.

Kelly Becker is president UK, Ireland, Belgium and The Netherlands at Schneider Electric