Rachel Reeves’ latest cash grab is a slap in the face for drivers – but she’s not finished
Rachel Reeves announced plans for a new 3p pay-per-mile car tax charge at her Auryn Budget, but the plan is already being attacked by all quarters.
Rachel Reeves’ pay-per-mile plan has been criticised by the industry (Image: Getty)
Rachel Reeves’ new electric pay-per-mile car tax charge has infuriated the motor industry, with manufacturers lining up to criticise the Chancellor’s latest revenue-raising measure. Ms Reeves confirmed the introduction of a £3 pay-per-mile charge on electric vehicles, alongside a £1.50 per mile rate for plug-in hybrid models from 2028.
The new Electric Vehicle Excise Duty (eVED) is a bid to offset lost fuel duty revenue, which is down around £3billion from pre-pandemic levels as more and more motorists make the switch to EVs. Increasing taxes is the easy part; dealing with the aftermath is something quite different, and Ms Reeves is already feeling the sting. The decision has been welcomed, much like a taxman’s letter, with manufacturers slamming the move even before the Budget was confirmed.
The new EV pay-per-mile charge will be introduced in 2028. (Image: Getty)
Ford, one of the most popular car brands in the UK, is among the headline marques hoping to push the latest EV tax plan into the bin. Days before the announcement, Lisa Brankin, Ford UK’s managing director, stressed it was “certainly not the right time” to start tracking EVs.
She stressed that a pay-per-mile charge was “just another brake” on demand for electric cars, with EV owners likely to be put off due to higher bills. European electric car giant Polestar was next, warning that the move was likely to “deter sales” and make people “think twice” about buying EVs.
Speaking to Express.co.uk, Polestar also warned that non-EV manufacturers slowly transitioning could become compromised. They highlighted that firms are already a long way behind the ZEV Mandate targets legislated by the Government, which could come back to bite.
This rule dictates the number of electric cars that must be sold, with current data indicating that brands are currently tracking at 22% compared to the 2025 target of 28%. Manufacturers invested heavily to transition their production lines to build EVs and were already struggling to woo consumers to make the transition.
Electric car sales could be affected by new EV tax rates (Image: Getty)
Now, brands are likely to feel like they have arrived at a boxing match with their arm in a sling as they face an even steeper uphill battle. The SMMT is also unhappy, branding the policy the “wrong move at the wrong time,” as they also warned of the risks associated with the ZEV Mandate target levels.
If industry thought this was bad, Ms Reeves isn’t ready to stop yet, with the Treasury suggesting that hydrogen cars could be next in the firing line. To date, there are fewer than 300 hydrogen cars in the UK, with only the Toyota Mirai and the Hyundai Nexo SUV currently available on the market.
The Treasury report reads: “There are also a small number of other car powertrain types, such as hydrogen fuel cell electric cars on roads currently, the treatment of which the Government will keep under review.”
Having learned their lesson from EVs, it’s unlikely that manufacturers will jump at the chance to invest in hydrogen production lines unless incentives are in place to win over customers. If this continues, the age of manufacturer innovation could well be at risk.
