HM Treasury’s consultation on the Introduction of Electric Vehicle Excise Duty (eVED) - Which? response

Which? welcomes this opportunity to respond to HM Treasury’s consultation on the Introduction of Vehicle Excise Duty (eVED). We focus our response primarily on the potential administrative burden on motorists of eVED and the implications for the sale of used cars. 

However, the introduction of eVED needs to be set in the context of the growing, but still relatively small, market. The core premise for introducing eVED in two years time is that Electric Vehicles (EVs) are becoming a mainstream mode of transport - but the Government needs to start treating them as such. Unfortunately we do not think this is the case, particularly when it comes to the many problems experienced by drivers using EVs when using the public charging network.

Despite an improving picture, drivers too often encounter poor signage, payment problems, frustrating connection experiences and accessibility issues - all compounded by the high cost of public charging. These have not been given the attention and priority they require to resolve them. Most EV drivers experience these problems whether they have a home charger or not (77% of drivers use the public network at least once a month or at specific times such as holidays) but they constitute a major barrier for motorists who cannot install a home charger and are considering switching to an EV. If eVED is introduced in 2028, charging on the public network must be as seamless as fueling a petrol or diesel vehicle, or EVs will remain largely restricted to those with their own driveways and dedicated parking spaces. 

The Government must put the driver experience at the heart of EV policy. A key starting point is to radically improve the Government’s understanding of the EV driver experience. We estimate that there are more journeys taken by EVs than by rail already, yet understanding the user experience is treated completely differently. In rail there is a 2,500 respondent per week survey designed to collect data as contemporaneously as possible (in line with standard transport data collection practice), compared to EV policy that relies on annual surveys and only captured contemporaneous experience information from 77 respondents in the last wave. 

This lack of high quality data means that the Government is poorly sighted on how often drivers are experiencing problems, which makes it hard for the Government to properly prioritise the issues that most affect driver experience. The Government should urgently explore a frequent nationally representative survey designed to collect data on drivers’ last charging experience, minimising bias in data collection.

On the design of eVED itself we are concerned that the proposed system of drivers estimating their mileage up-front is likely to result in a number of issues: 

• "Bill shock” for motorists who underestimate, and financial issues for some of those who over-estimate. This could be particularly acute for drivers of Plug-in hybrid electric vehicles (PHEVs) who may misunderstand that they are expected to pay for all their mileage, not just that travelled by electric power. 
• The potential impact on the used market due to the plan for mileage already paid to remain with the vehicle. The used EV market is still immature, and consumer concerns about eVED could hold this important market back. The consultation makes an unevidenced, broad brush, assumption that “The government expects the eVED status of the vehicle to be reflected in the sale price of the vehicle” - this assumes perfectly economically rational consumers, but the reality is almost certainly different. Many drivers are likely to not realise they need to check the eVED payment to date, calculate incorrect reconciliation figures (particularly with the added complication that a reconciliation from a previous year may be part of the eVED paid so far), or be concerned about the potential manipulation of mileage data. The Government must conduct behavioural research rather than rely on simplistic assumptions in this area.

We think that the Government should consider: 

• Collecting eVED on the basis of out-turn mileage, not an up-front estimate: It is not clear from the consultation why the payment should be up-front. Other taxes that depend on activity are reported at the end of the financial year, and payments can be made in instalments up to 10 months after that point. 
• A system where owners pay for the mileage they have used at the point of sale, rather than the payment remaining with the vehicle. The Driver and Vehicle Licensing Agency (DVLA) hold the details of the previous owner, which should make this feasible.

There is also a significant problem that the current proposals would end up taxing some drivers twice for the same miles. For example drivers of PHEVs with low electric range, that will be paying both fuel duty and eVED for a substantial proportion of their mileage and motorists who often travel abroad; particularly an issue for cars in Northern Ireland. This is simply unfair, and would appear to be a form of double taxation.