More than a third of motorists would consider replacing their petrol or diesel vehicle with an electric model if the Insurance Premium Tax was ditched, according to new research.
Paul Baxter, CEO of The Green Insurer which carried out the research, is calling for the removal or reduction of the 12% IPT on electric models as a practical step to encourage drivers to transition away from petrol and diesel cars.
“Scrapping or reducing IPT on electric vehicles would be a straightforward way to help encourage drivers to make the switch from petrol or diesel cars,” said Baxter. “Our research shows 36% of motorists would be encouraged to replace their current petrol or diesel vehicle for an electric model if the IPT were removed.”
Baxter highlighted the tension between the car industry and the UK Government over penalties for failing to meet rising zero-emission sales targets. Currently, manufacturers face fines for each non-zero-emission car sold, with targets set at 22% of car sales and 10% of van sales this year, rising to 28% and 16% respectively in 2024.
While Labour’s commitment to reinstating the 2030 ban on new petrol and diesel car sales is commendable, Baxter argued that further measures are needed to make EVs a financially viable option for more drivers.
“IPT has doubled over the past decade, now sitting at 12% and raising £8.15 billion for the Government last year. While giving up this revenue in the current economic climate is challenging, short-term action is necessary to accelerate EV adoption,” he stated.
The Green Insurer’s research revealed that 60% of motorists view the higher purchase price of EVs compared to traditional vehicles as a deterrent, while 52% are concerned about battery replacement costs. Additional concerns include the perceived higher cost of servicing (34%) and insurance premiums (23%).
Baxter pointed out that that getting more new EVs on the road will create a supply of affordable, greener used vehicles in the future.
“This issue is too significant to become entangled in party politics. Whatever fiscal challenges the Government faces, scrimping on the environment is simply not an option we can afford,” he said.