by Future Transport-News
23 Sep 2022
Suppliers Pod Point
Pod Point: In Liz We Trust? What the New PM Means for EV Adoption
With Liz Truss taking up the mantle of Prime Minister, our Head of Policy & Public Affairs, James McKemey, explores how her policies will impact the EV industry.
Whatever your politics, you have to recognise Liz Truss has inherited a very challenging deck of political cards.
Rampant inflation, debt at ~100% of GDP, Brexit struggles, a major land war in Europe to name a few. And, of course, the related gas crisis, which has already led her to issue her “Price Guarantee” on domestic electricity bills – something likely to cost ~1x annual NHS budget over the next two years, followed by the Energy Bill Relief Scheme for businesses (likely £10bns, albeit only for 6 months). Oh, and the longest-reigning, stunningly popular monarch died 2 days after swearing her in. Ouch.
But, what we really want to know is – what does her arrival mean for electric vehicles (EVs)?!
Truss’ views on EVs are actually not immediately obvious; she hasn’t been particularly overt about them either way, so we’ll have to try and glean them.
On the (potentially) negative, she made some curious anti-solar farm and pro-fracking comments in her leadership campaign, alongside some other classic “red meat” comments (suggesting it’s not yet clear if the French President was “friend or foe”) to energise a certain key Tory demographic.
Plus, appointing Jacob Rees-Mogg as Secretary of State (SoS) for Business Enterprise and Industrial Strategy (BEIS) may, however fairly, feel to some more of a yearning for steam power and imperial units than clean transport and innovation. So there is some cause for concern in the mood music, if not (yet) specific policies.
On the other hand, she’s signed up to the Conservative Environment Network’s “Environment Pledge”, with key commitments to the likes of Net Zero by 2050 and the 2030 phase out of internal combustion engine (ICE) cars, alongside specific measures including the continued roll out of EV chargepoints.
And while the all important Office for Zero Emissions Vehicles (OZEV) is part owned by BEIS, it is perhaps closer linked to the Department of Transport (DfT), where it’s housed. Grant Shapps’ replacement as SoS for Transport is Anne Marie-Trevelyan (AMT). AMT has shown consistent commitment to net zero and the energy transition in her recent roles including as junior Minister at BEIS in 2021 and as UK International Champion on Adaptation and Resilience for the COP26 Presidency.
This is more promising. But assessing Liz Truss’ politics in general isn’t that easy. The recent harder-line, right-winger of the leadership election might not be 100% reflective of how she’ll govern. This true blue Tory (previously fiercely republican Liberal Democrat), Brexiteer (previously vociferous Remain campaigner) might, put delicately, be more political weathervane than signpost.
Economically, she’s made one thing clear – she really doesn’t like tax. But the EV sector doesn’t really rely on tax receipts so much anymore. While there are some big investments to come (RCF and LEVI), direct grants are on their way out, tapering to zero.
In fact, the most potent incentive in our industry currently is the low Benefit in Kind tax rates on company vehicles – if she chooses to maintain those low rates, it will do the early industry a world of good. Bringing VAT on public charging down to 5% would also be a shrewd move!
Of course, we’d like to see fuel duty climb, rather than fall, and the introduction of a cross-border carbon tax would be a hugely potent measure to address climate change. But we may have to accept these things are unlikely to progress much in the coming months/years.
And whether such an intervention is representative of her economics or not, her “Price Guarantee” and “Energy Bill Relief Scheme” should ensure that EVs will remain much cheaper overall per mile than ICE cars, which helps. So no immediate dramas here.
Uncertain Political Outlook
The incoming PM doesn’t have much guaranteed term to serve. With her determination to mark a break from previous governments, she’s taking her policy agenda away from the Conservative Party 2019 Manifesto – e.g. on fracking. Thus the pressure for her to call a general election will only grow.
But even if she doesn’t yield, we have to have an election by the end of 2024. Including campaigning time, she’s got a maximum of ~18 months in this term, much of which will likely be consumed with active crisis management, rather than radical change.
The EV Genie Is Out the Bottle
Ultimately, politics schmolitics. The fundamental superiority of the EV in terms of performance, convenience and emissions reductions will only become more real and more apparent as time moves on. We may have a temporary crisis in the price of electricity and a supply chain crunch holding back the recent rapid growth of our sector, but these things will right themselves.
Radical and deliberate interventionist policies would be needed to prevent the triumph of the electric car. It’s happening anyway. Good policy is about making the emissions savings real sooner, and ensuring the transition takes place in a fair way.
And we wish her the very best with this task!
This article was originally published by Pod Point.
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