Features
11 Jun 20

UK leasing sector calls for scrappage scheme to support new and used EV sales

The UK leasing industry has called on the government's rumoured car scrappage scheme to prioritise the sale of both new and used electric cars. In a joint submission to government, the fleet-focused BVRLA and the Finance Leasing Association (FLA) have also promoted the idea of a Mobility Credit, that would allow drivers to trade-in an older, more polluting vehicle in return for a sum of money that they could spend on a ‘Mobility as a Service’ application or travel card.

Stimulus to help economy recover

National newspapers have reported that Prime Minister Boris Johnson is due to announce a series of measures to stimulate the economy, including a £6,000 [€6,700] scrappage allowance for anyone trading in an old petrol or diesel car and buying an electric vehicle.

The government introduced a similar scheme in 2009 after the financial crash, when drivers were able to select new, clean internal combustion engine models.

After two months of almost no new or used vehicle sales during the coronavirus lockdown, the BVRLA and FLA said that helping the automotive sector to recover from the Covid-19 shutdown could play a major role in helping the wider economy to bounce back.

“An automotive demand stimulus package can kickstart the industry’s recovery and support the Government’s objectives of decarbonising road transport and delivering clean growth,” said the two associations. “Any stimulus scheme must prioritise the EV market, both new and used. It should make the UK a more attractive market for OEMs to sell their EVs and help those who can’t afford a new car to buy or lease a used EV.”

EV grants should be for new and used cars, say BVRLA and FLA

 

Anxious that a scrappage scheme which is available only to buyers of new cars could undermine the residual values of ex-fleet vehicles (by persuading used car buyers to purchase a new car instead), BVRLA Chief Executive Gerry Keaney said: “To be truly effective, any EV stimulus scheme must work for both the new and used market.”

The BVRLA would like to see any such scheme prioritise zero emission cars, although it says plug-in hybrid cars also have a role to play in delivering decarbonisation. Pure electric cars currently qualify for a grant of up to 35% of the purchase price of the vehicle, up to a maximum of £3,000 [€3,350] (and only for cars costing below £50,000 [€55,750]). PHEV and hybrid vehicles have to produce CO2 emissions of less than 50g/km and be able to travel at least 112km (70 miles) in zero emission mode to qualify for a grant, which excludes every hybrid on the market at the moment.

No right-hand drive EVs?

New incentives to encourage the uptake of electric cars in major European markets have raised fears that manufacturers may channel their EV production to left-hand drive markets, leaving the UK short of supply.

“The other scrappage schemes introduced in France and Germany, together with EU ‘CAFÉ’ targets, mean that some of the most popular EV models are going to be in short supply in the UK in the short term,” said a spokesman for the BVRLA. "As a result fleets may need to be more pragmatic about what EVs they can bring on fleet. Government needs to offer an attractive tax and incentives environment and ensure that its own emissions requirements are at least as robust as those in place in the EU."

OEMs: don't ignore Euro 6 petrol and diesel

Germany’s new scrappage scheme is limited to electric cars, but the FLA and BVRLA are also calling for financial support to help people scrap older, more polluting cars in favour of cleaner, Euro 6-compliant petrol and diesel models, both new and used.

This wider approach is vital according to the SMMT, which represents UK vehicle manufacturers. It is concerned that any scheme designed to stimulate the new car market should not be restricted solely to electric cars, which account for less than 3% of the new car market, and argues that any government measures designed to boost demand for new cars should not be conflated with plans for a green recovery.

Mike Hawes, SMMT Chief Executive, said: "The automotive industry is fully committed to a zero carbon future, investing massive sums to bring new electric vehicles to market in ever greater numbers. Long-term ambition, however, must not be confused with the short-term need to restart the sector and secure its very survival. 

“Electric vehicles make up a tiny fraction of the overall market, and an even smaller proportion of the UK’s automotive manufacturing output. Sales are growing, especially in recent months, however, to reboot British manufacturing and safeguard the thousands of jobs on which it depends, we would need measures that support the entire market, reflecting the diversity of UK automotive manufacturing and the range of choice available to UK consumers.”

Walking and cycling more important than EVs

Environmental campaigners, including Greenpeace and Transport & Environment, support UK government grants for electric vehicles to replace petrol and diesel cars, but their focus is on greater investment in walking and cycling infrastructure, rather than private cars.

Greg Archer, UK Director of Transport & Environment, said: “City residents have appreciated the cleaner air and quieter streets during the lockdown and recognise a city with fewer cars is better. The Coronavirus tragedy has also shown breathing choking car fumes is not inevitable in cities. More people now want to walk, cycle and drive pollution-free cars, and - once buses and trains are safe - passengers will be happy to use them again. Public attitudes have changed and political leaders need to listen and act rather than running scared from a vocal minority of motorists, shopkeepers and taxi drivers who constantly reject the introduction of low emission zones and other measures to restrict car use.”

Authored by: Jonathan Manning