The electric vehicle (EV) sector was one of the big winners in yesterday’s Budget, after Chancellor Rishi Sunak confirmed the £500 million investment into charging infrastructure first mentioned in the Conservative party’s manifesto last year.
Current± caught up with James McKemey, head of insights at charging infrastructure company Pod Point, to find out how the sector has welcomed the news.
What is your reaction to yesterday’s Budget?
As ever, there are positives and negatives.
The biggest disappointment is the freeze in fuel duty. The environmental impacts of the decade long freeze are becoming increasingly clear, and with the collapse in oil price it was a golden opportunity to reintroduce increasing duty without having substantive immediate effects on pre-electric drivers. To accelerate the switch to electric vehicles we need to continually increase disincentives on carbon intensive options and increase incentivisation of cleaner technologies. The government seems to recognise this, but the freeze is inconsistent with their decarbonisation agenda.
We also have some concerns over a shortage of notice regarding some changes to grants etc, though this presents a shorter term issue.
However, there are some very bright points too; new funding for charging infrastructure, funding EV incentives and tax measures - including the removal of the £40k “luxury car” VED threshold for EVs. There’s definitely reasons for cheer.
Will the proposed investment in EV infrastructure go far enough?
We’ve always maintained the EV charging infrastructure will mainly be paid for by private investment - from funded rollouts, to individuals and businesses buying the chargepoints they need to charge their EVs.
Clearly the funding measures won’t provide all the infrastructure required - that was never the intent, but they definitely will help shape the market, addressing potential areas of market failure and seeding new opportunities. It’s up to the EV charging industry to provide enough of the right infrastructure, in the right places to allow EV drivers to always go far enough.
Were there any obvious omissions Pod Point would have hoped for?
The fuel duty freeze seems a needlessly missed opportunity and would have reinforced their new commitment to ban the sale of non-zero emission vehicles from 2035. Otherwise we await to see the details of how the announced funding will be used, so it’s hard to comment too much.
There are a few areas where we believe there is potential market failure that could be addressed, and we share these directly with OLEV, but we recognise there are competing priorities for limited public money.
What does the Budget mean for the EV sector?
It is a continuation of governmental support for the sector that stretches back about a decade now. This consistent support has provided a level of certainty that has helped, and continues to help, this sector flourish.
The flagship policy in this announcement is the £500m for “rapid charging hubs”. It’s likely this is primarily earmarked to support OLEV’s work on Project Rapid, looking at high powered, en route charging at motorway service areas and other locations along the strategic road network.
Installations of high powered chargers at scale incurs substantial grid reinforcement costs that can be hard to justify for infrastructure firms in the early market - some support particularly for these reinforcement costs should enable the provision of a network that should forever eliminate the issue of "range anxiety” for the whole of the UK. If we get this right, then this is great news for EV drivers, and more broadly anyone who benefits from reduced carbon emissions and air pollutants.
What are your expectations from the Office for Low Emission Vehicles’ comprehensive electric vehicle charging infrastructure review?
We hope to continue our work with OLEV to identify the areas where they can add value, but also those areas where they need to allow this thriving marketplace to innovate and trial different business models. We want the costs of the comprehensive charging rollout to be borne - directly, or indirectly - by the drivers as much as is possible, rather than the taxpayer.
What remains the biggest barriers to the EV rollout?
In terms of infrastructure, the more EVs on the road the easier it is to both sell charging infrastructure and to justify proactive investments that are often required ahead of demand. Getting the proportion of new sales up into double figure percentages as soon as possible is the best way to stimulate EV infrastructure rollout. And it is absolutely clear that EV demand still outstrips supply - it is supply that is crucial, and we are heartened by the increasing pace of electrified product being released to market.
In order to secure that supply, we must recognise that conventional OEMs face substantial challenges switching to EVs, this is where a consistent regulatory and policy environment is vital. This environment should be making it clear that the only way to have a long term automotive business in the UK is to offer zero emission vehicles - the current clear winning technology for cars being full battery electric - whilst providing tapered support for transitional technologies like plug-in hybrid electric vehicles.