Electric car sales soar as UK car market continues strongly

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Sales of plug-in cars have increased more than 15% in January, compared with the same period last year. Interestingly though, it is not plug-in hybrids (PHEVs) that have driven growth this time around, but pure electric models (EVs).

Over the past few months, sales of EVs have been flat or even slightly in decline. However, with more than 1,000 units registered in January 2017, compared to January 2016’s 584, the pure electric market has grown 73%.

In comparison, PHEV registrations have decreased slightly, to 1,563 units in January 2017 from last year’s 1,683 – a decline of 7%. Combined, registrations of plug-in models in January 2017 come to 2,573, an increase of 13.5% over the previous year.

Registrations of Plug-in Car Grant Eligible (PiCG) vehicles is slightly higher still, at more than 15%, with the figure excluding those PHEVs that cost more than £60,000 or that don’t meet certain emissions of range criteria.

All increases in registrations come against an overall market that grew 3%, with almost 175,000 new cars registered in January. In total, sales of plug-in vehicles accounted for 1.5% of the new car market in January.

Although it is not clear why this reversal in fortunes for EVs and PHEVs has come about, it perhaps has something to do with forthcoming VED changes due later this year. With many plug-in cars requiring a longer time between order date and delivery because of demand, some buyers could be put off by buying a PHEV that is likely to arrive after the changes come into effect, and therefore incur higher tax costs.

VW reaches $4.3 billion US settlement over emissions scandal

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Volkswagen has agreed a settlement with the US Government to pay $4.3 billion (£3.5 billion) in fines and penalties relating to its part in the Emissions Scandal.

The group has confirmed that it will plead guilty to criminal misconduct under US law. The terms agreed with the US Department of Justice (DoJ) say that $2.8 billion (£2.28 billion) will be used to pay a fine, and the appointment of an independent monitor for three years. The monitor will oversee the company’s compliance with the terms of the agreement.

A further $1.45 billion (£1.2 billion) will pay for a combined penalty to resolve US federal environmental and customs-related civil claims. Separately, Volkswagen has agreed to pay $50 million (£41 million) to the civil division of the DoJ to settle potential claims under the Financial Institutions Reform, Recovery and Enforcement Act. Volkswagen denies any liability and disputes these claims but is settling to avoid expensive, uncertain, and protracted litigation.

The settlements will resolve Volkswagen’s liability under US law, but will not cover any cases brought against the company in any other countries or unions. Volkswagen states that it continues to cooperate with prosecutors offices in Germany.

The deal will need to be approved by a US judge to go through, and it has attempted to move quickly to reach an agreement before the pending change of administration, which could have delayed a settlement for months.

Matthias Müller, Chief Executive of Volkswagen Group, said: “Volkswagen deeply regrets the behaviour that gave rise to the diesel crisis. Since all of this came to light, we have worked tirelessly to make things right for our affected customers and have already achieved some progress on this path.

“The agreements that we have reached with the U.S. government reflect our determination to address misconduct that went against all of the values Volkswagen holds so dear. They are an important step forward for our company and all our employees.”

Hans Dieter Pötsch, Chairman of the Supervisory Board of Volkswagen Group, said: “When the diesel matter became public, we promised that we would get to the bottom of it and find out how it happened – comprehensively and objectively. In addition, a task force of our Group Audit function conducted an investigation into relevant processes, reporting and monitoring systems as soon as the issue came to light. We are no longer the same company we were 16 months ago. The Supervisory Board and the Management Board have faced up to past actions.”

Company car tax rates for ULEVs 2020-21 revealed

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The future structure for company car tax bands have been published by HMRC for the tax year 2020 to 2021, with a focus on promoting the use of ultra low emission vehicles (ULEVs). The plans have been announced in draft legislation that is now open for consultation, with rates to be confirmed in the Budget 2017.

The new system would see a number of new tax bands introduced to differentiate between ULEVs according the electric-only range, while a number of redundant high emission bands have been cleaned up into one rating.

Whereas currently there is one BIK band for vehicles with CO2 emissions of 0-50 g/km, come 2020. there would in the future be six. Electric vehicles with zero tailpipe emissions are likely to have a have a BIK rate of 2%, while models with 1-50 g/km CO2 – such as PHEVs – would vary from 2%-14%.

The reason for the change is that HMRC is aiming to offer greater benefits to those that choose vehicles with longer electric ranges, and are therefore more likely to be in zero-emission mode more often.

Electric cars emitting 1-50 g/km CO2 and able to travel 130 miles or more would also have a BIK rate of 2%, while models that cover less than 30 miles on electric power would have a BIK rate of 14%.

Reflecting the increase of lower emission cars, new CO2 bands are proposed, with each subsequent band seeing smaller increments. Currently, three bands cover vehicles with emissions from 51-99 g/km CO2; in the plans there would be 10.

To make sure there isn’t a huge number of bands though, models that emit 160 g/km CO2 or more all have the same maximum BIK rate of 37%, which tidies up a number of bands that will all have the same rating in the next few years.

There is no mention of a diesel surcharge in the draft legislation, looking as though the extra 3% charged for diesel models over petrol (up until the limit of 37%) will be scrapped (again).

The table below shows CO2 bands and BIK rates from the HMRC Finance Bill 2017 draft legislation document.

CO2 (g/km) Electric range (miles) BIK 2020 to 2021
0 2%
1-50 >130 2%
1-50 70 – 129 5%
1-50 40 – 69 8%
1-50 30-39 12%
1-50 <30 14%
51 – 54 15%
55 – 59 16%
60 – 64 17%
65 – 69 18%
70 – 74 19%
75 – 79 20%
80 – 84 21%
85 – 89 22%
90 – 94 23%
95 – 99 24%
100 – 104 25%
105 – 109 26%
110 – 114 27%
115 – 119 28%
120 – 124 29%
125 – 129 30%
130 – 134 31%
135 – 139 32%
140 – 144 33%
145 – 149 34%
150 – 154 35%
155 – 159 36%
160 and above 37%

Table courtesy of HMRC. Electric range in miles is the number of kilometres declared on the certificate of conformity or type approval, multiplied by 0.62.

EVs, connectivity and infrastructure feature in Autumn Statement 2016

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In the UK’s Autumn Statement, Chancellor of the Exchequer Phillip Hammond MP announced a further £390 million investment by 2020-21 in ultra-low emission vehicles (ULEVs) and connected and autonomous vehicles (CAVs).

As part of the statement, Mr Hammond revealed that £80 million will be provided for charging points for ULEVs, while £100 million will be invested in testing infrastructure for driverless cars.

Related investments include £150 million in support for low emission buses and taxis, and £20 million for the development of alternative aviation and heavy goods vehicle fuels.

In addition to supporting the advanced and expanding ULEV industry in the UK, a wider range of transport-based investments were also announced including a new Cambridge-Oxford Expressway which will not only ease congestion along a route that also takes in Milton Keynes, but also reinforce the regions research and technology corridor, of which the automotive industry plays a significant part.

The tech corridor is part of a new £1.1 billion investment in the UK road network, aimed at reducing congestion at traffic pinch points and their environmental impact.

The UK Government will also provide £23 billion for a National Productivity Investment Fund over the next five years, which will be of benefit to the UK’s automotive manufacturing and research & development industries. Likewise, the automotive industry will benefit from the £1 billion investment in full-fibre broadband and 5G mobile communications, with the latter considered an important element in the roll-out of connected and autonomous cars.

Regarding changes to transport taxation, from today to the end of March 2019, business installed EV charging points will now be eligible for Enhanced Capital Allowances (100% First Year write-down), and ULEVs are excluded from clamp-downs on existing Salary Sacrifice schemes, with sub-75 g/km CO2 vehicles set to be available under such schemes.

Changes to Company Car Tax bands were also announced from 2020-21, with new lower bands set to be introduced for the lowest emitting cars, while vehicles emitting more than 90 g/km CO2 will see their BIK percentage rise one per cent. Details to expected to follow by the next Budget in March 2017.

As expected, fuel duty for petrol and diesel will be frozen at 57.95 pence per litre until April 2017, the seventh successive year that it remains unchanged saving the average car driver £130 a year, and the average van driver £350 a year.

Air quality ruling sees diesel vehicles face city centre charges

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Charges are likely to be put into place for drivers of polluting diesel vehicles driving into major city centres after the UK Government accepted the High Court’s decision that existing policies to tackle air pollution were so poor as to be illegal.

The ruling stated that current measures don’t comply with European Union legislation to improve air quality and meet emissions limits. According to the High Court’s findings, the future vehicle emissions calculations from the government were “too optimistic”, reports Reuters.

There are already plans to implement an Ultra Low Emission Zone in London, which will charge drivers of vehicles not meeting certain emissions limits to drive in the centre of the city. The move is set to remove a large number of older diesel vehicles from roads in the centre of London – only Euro 6 diesel models will be exempt initially.

There are also plans for similar Clean Air Zones to be created in Birmingham, Leeds, Nottingham, Derby, and Southampton by 2020. These differ though in the respect that private car owners would not be charged, rather users of older buses, taxis, coaches and lorries will be discouraged from driving in the zones because of charges.

Following the decision, the Government has agreed to reassess predicted emissions levels, based on more accurate real-world driving tests. Mr Justice Garnham also stated that any delay on the grounds of costs would be unacceptable, with the health issues at risk far outweighing those of budgets.

The decision is likely to give a boost to sales of Ultra Low Emission Vehicles, as drivers switch from diesel models to plug-in vehicles in the knowledge that they won’t be subject to air pollution charges.

Mitsubishi Nissan deal creates electric superpower

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Mitsubishi has joined the Renault-Nissan Alliance to form one of the three largest automotive groups in the world. The move has also created a dominant force in the plug-in car market, with the likes of the Mitsubishi Outlander PHEV, Nissan Leaf, and Renault Zoe all best selling models.

The deal has seen Nissan take a 34 per cent share in Mitsubishi Motors, creating an automotive group with global sales of 10 million units in the 2016 fiscal year.

Nissan chairman Carlos Ghosn revealed that the move will see the firms collaborate on joint purchasing, share manufacturing plants, develop common vehicle platforms, and technology share.

This has significant implications for the ultra low emission car market since the Outlander PHEV, Leaf, and Zoe are the first, second and fourth best selling plug-in cars in the UK. The Leaf is the highest selling electric vehicle worldwide, and the Zoe often takes number one spot in a number of European countries.

Ghosn said: “The combination of Nissan, Mitsubishi Motors and Renault will create a new force in global car-making. It will be one of the world’s three largest automotive groups, with the economies of scale, breakthrough technologies and manufacturing capabilities to produce vehicles to serve customer demand in every market segment and in every geographic market around the world.”

The deal should free up a large amount of revenue, even for short term targets. Bosses are looking to save around £190 million next year, rising to more than £470 million the financial year after that.

Half of all new cars will be autonomous in 25 years says Kia

kiasoulevautonomous

Autonomous cars will make up half of all new car sales in 25 years’ time, according to a new report from Kia. With the company celebrating its 25th anniversary in the UK, Kia commissioned a report to look at what the next 25 years will hold for the industry.

According to the forecasts, around eight million connected cars will be on the UK’s roads by 2020, and in 25 years autonomous cars will have their own dedicated lanes on motorways.

Fully autonomous cars will account for 50 per cent of total car sales in a quarter of a century’s time. Current adaptive cruise control and driver assistance systems such as Volvo’s Pilot Assist will add to that figure in more traditional vehicles.

With the increase in autonomous and connected cars, the country’s infrastructure will require a redical overhaul. This it to accommodate the mixture of autonomous and connected vehicles, and those that are stand-alone like the vast majority of today’s cars.

Part of the predictions see lanes assigned specifically to advanced vehicles on motorways, with the cars able to communicate with the road’s infrastructure to identify traffic, obstacles, and even potholes.

The report, which was commissioned in conjunction with Dr. Frank Shaw of the Centre for Future Studies, reveals some of the benefits of autonomous vehicles.

With level four autonomy (cars that are completely self-driving with no need for human input at all) parking fines will be almost eliminated as cars will be able to drop off their passengers before finding a suitable space, whilst insurance premiums for road traffic accidents are likely to be almost obsolete with cars able to avoid collisions through communication with each other.

With cars able to transport themselves between locations there is also likely to be an increase in car sharing – bringing down the costs and emissions associated with owning a car. The driving test process will be drastically overhauled – drivers will still need a license for partially autonomous cars, but fully self-driving vehicles will allow those who are unable to drive for reasons such as disability a freedom previously denied to them as no human intervention will be required.

Dr. Frank Shaw, who has been described by Time Magazine as one of the 10 most influential thinkers in the world, said: “The future of the car industry is an exciting one, as there will be a transformation from an industry built by mechanics to one that is largely driven by software developers.

“There is considerable speculation in 2016 about autonomous driving, the full impacts of which will not become manifest until the 2040s. I am confident however that over the next twenty five years, the industry and technology companies will deliver a safer, more efficient and environmentally friendly driving experience for everyone.”

Paul Philpott, Kia Motors UK President and CEO, said: “Technology in the motoring industry is moving at an incredibly fast pace, and this report is a fascinating look at how the world around our cars will need to adapt in order to keep up

“When Kia first started distributing cars in the UK 25 years ago the world was a very different place, as we have grown from a small importer with just one model to operating in 188 dealerships across the UK, we’re looking forward to the next 25 years and what the future will bring!”

UK Government ‘too slow’ to act following VW emissions scandal

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Investigations should be started by the Department for Transport (DfT) into the impact of Volkswagen’s emissions scandal in the UK, accroding to a report published by the Transport Select Committee. The Parliamentary committee also states that the DfT should consider prosecuting the company, and that the department has acted too slowly in looking into the German manufacturer’s actions.

Although admitting to the defeat device being illegal in the United States – where the scandal first broke – the manufacturer disputes whether it has broken the law in Europe. The German vehicle approval authority disagrees and states that VW’s software fits the legal definition of a defeat device.

While there are more than 1 million cars affected in the UK but, as of April, none had yet been called in and had repairs carried out. These range from a software update to adding a new piece of hardware.

Committee Chairwoman Louise Ellman MP said: “Volkswagen Group has acted cynically to cheat emissions tests which exist solely to protect human health. Volkswagen’s evidence to us was just not credible but the government has lacked the will to hold VW accountable for its actions. There is a real danger that VW will be able to get away with cheating emissions tests in Europe if regulators do not act.

“We are concerned by the Department for Transport’s ambivalence towards assessing the legality of Volkswagen’s use of defeat device software despite its condemnation of Volkswagen’s actions to us and in the media. The Department for Transport was too slow to assess the use of its powers under the Road Vehicles (Approval) Regulations 2009 to prosecute Volkswagen for its deception. It took five months before the DfT took even preliminary legal advice on a prosecution.

“It is deeply concerning that the Department is relying on the European Commission to act even though the Commission does not hold the necessary evidence or have powers to prosecute. We are also concerned that regulators have shown little interest in establishing whether Volkswagen Group has broken any laws.

“The Vehicle Certification Agency has evidence that defeat devices were installed in vehicles that it type approved but it has not attempted to conduct any tests to prove that type approval was contingent on the use of the defeat device software. The VCA must measure the exact contribution that the software made to meeting Euro 5 emissions standards. That would facilitate investigations and court actions in the UK and across Europe.

“Volkswagen’s treatment of customers in Europe compared to its treatment of customers in the US is deeply unfair. Volkswagen said it was justified in providing goodwill payments to US customers, but not European customers, on the grounds that US customers would face delays to fixing their vehicles. The delay to fixing vehicles in Europe is now creating a great deal of uncertainty over whether cars will be fixed, their residual values and their compliance with regulations.

“We do not accept Volkswagen’s justification of its policy on payments and see nothing to justify their refusal to offer comparable payments to customers in Europe. Volkswagen must provide goodwill payments to European vehicle owners equal to offers that have been made to US vehicle owners. The Sale of Goods Act 1979 might also offer owners some recourse for compensation.”

The Transport Select Committee’s decisions have no legislative impact but are considered as part of governmental decisions. The full report is available to read here.

EV tipping point due in 2027 according to industry analysis

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More than half of all new car registrations in the UK by 2027 could be electric vehicles according to analysis carried out by Go Ultra Low. This would see around 1.3 million new EVs registered each year and keep the country on course to meet the government’s target of all new cars and vans to be electric by 2040.

Go Ultra Low – the campaign for ultra low emission vehicles (ULEVs) backed by the UK Government, the Society of Motor Manufacturers and Traders, and EV manufacturers – has carried out the research in collaboration with the above groups, alongside Auto Express, the Committee on Climate Change, and the RAC Foundation.

Motoring magazine Auto Express backs the forecast, with its recently announced Driver Power 2016 survey revealing a number of EVs as the best cars around. The survey is completed by car buyers that have lived with their vehicle for a few years and rates all aspects of vehicle ownership.

More than 63,000 Plug-In Car Grant (PICG) eligible vehicles have bee registered since the grant began in 2011, with last year’s registrations double those of 2014, which in turn were three times that of the year before.

Steve Fowler, Auto Express Editor-in-Chief said: “The positivity and appreciation of electric vehicles by their owners in this year’s Driver Power survey is suggestive of a step-change in public perception of these vehicles. We are moving towards a tipping point for electrically-powered cars, so it’s entirely possible that by 2027 these vehicles will dominate the market as the top choice for new car buyers.”

Poppy Welch, Head of Go Ultra Low, said: “The huge interest in electric vehicles and their subsequent rapid rise in uptake has been spectacular so far, with more than 60,000 EVs registered in the past five years. These rises are just the start of the electric revolution as Go Ultra Low analysis suggests that electric vehicles could dominate the new car market as early as 2027.”

Low carbon cars to be penalised by tax changes in UK

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Buyers of lower-emission cars are expected to bear the brunt of changes to Vehicle Excise Duty (VED) car tax from next April 2017, with those in the 91-100 g/km of CO2 band hardest hit, seeing costs over six years rise from nothing to £820.

Research conducted by Parkers suggests that of the estimated £5.2 billion of additional revenue the new VED rules will generate by 2023, £4.7 billion will be from buyers of cars emitting 1-130 g/km of CO2, all of which are currently tax-free for the first year.

Initially, the 2017 VED system appears to be an update of the existing scheme, albeit with new bands created and others combined. Notably, only buyers of cars with zero CO2 emissions will have the ability to remain car tax-free under the First Year Rate, as any model producing even 1 g/km of CO2 will be subject to a charge from next year.

There’s a further surcharge for cars with a list price of £40,000 or higher – regardless of emissions, an annual charge of £310 from year two through to six will be imposed.

Buy a new car emitting just 99 g/km of CO2 from April 2017 and instead of enjoying VED tax-free motoring, you’ll instead be lumbered with an £820 tax bill over the first six years of ownership.

Replacing the Standard Rate sliding scale for year two onwards will hit buyers of cleaner cars and effectively provide a financial incentive to purchase models which pollute most. Zero-emission cars again remain free, but all others face a yearly bill of £140.

Premium plug-in hybrids also take a whack despite their greener credentials. Select one with emissions quoted at 50 g/km that also costs over £40,000 and by the time it’s six years old its owner will have contributed £2,260 to the Treasury instead of nothing under the present rules. Meanwhile, those who opt for a high-polluting car priced below that £40,000 cap will actually be up to £925 better off under the new scheme after six years.

While Ecolane agrees with Parkers and Next Green Car in supporting the use of future VED revenues to pay for road network improvements, we strongly oppose the new VED tax regime from 2017 as it unfairly penalises owners of most low emission cars, while simultaneously reducing the tax bill for the heaviest polluters. It will also have a detrimental impact on emissions from road transport.

Next Green car’s director Dr Ben Lane commented: “The forthcoming change in VED tax from April 2017 will undermine the huge progress made since 2001 in aligning car tax with CO2 emissions as one of several price signals aimed at encouraging the purchase of low carbon cars. It will also break the link with company car tax which will continue to be based on CO2 emissions; a tax system with a proven record of incentivising low carbon vehicles.”

Ben Lane added: “Along with many other motoring organisations, we will be campaigning during 2016 for the planned changes in VED taxation to be scrapped and replaced with a sliding scale based on emissions.”

Click here for VED tax rates from April 2017 [Next Green Car]

Original research conducted by Parkers.co.uk