The world of fleet management in the UK is poised for significant changes in the coming years. I recently discussed this topic, shedding light on the upcoming legislative shifts that will redefine the landscape.
1. Zero Emission Vehicle Mandate:
The UK government has set a Zero Emissions Vehicle mandate containing targets for EV sales that motor manufacturers must meet from 2024 until the ban on petrol and diesel vehicles in 2035. In 2024, OEMs will be required to sell at least 22% of car EVs and 10% of van EVs within their UK sales. This rises in stages to 80% of volume for cars and 70% for vans by 2030 and 100% by 2035. Failure to hit the target will result in a £15,000 fine for every car and £9,000 fine for every van that doesn’t comply. From 2025 the fine for vans increases to £18,000. OEMs can bank overachievement of targets in one year against achievement of targets in subsequent years or they can also buy excess target from other manufacturers (up to a total of 75% of their target, this falls to 25% from 2026).
Potentially the ZEV mandate may restrict the numbers of non-EV sales a manufacturer will make in the UK depending on its EV sales. This could mean fleets find access to non-EVs is reduced leading to supply problems as well as decreases in discounts available. This could significantly impact the cost of leasing non-EV models depending on the manufacturer, creating a challenging market for fleets. This is especially the case for vans where EV sales are particularly low and where early EV van models suffer from usability issues due to range and payload capability. Van fleets may find access to their preferred product particularly challenging and costly, especially in the short to medium term.
2. WLTP Adjustments:
The World Light Vehicle Test Harmonisation Protocols (WLTP) is set to undergo changes. The current test favours plug-in hybrids due to their small battery sizes and perceived efficiency. However, the reality is very different, with much lower mpg’s and significantly higher CO2 emissions than reported. When these changes are implemented (thought to be circa 2025) the benefit in kind tax for plug-in hybrids will undoubtably increase substantially – potentially 3-fold.
Should these changes be implemented, they would significantly affect CO2 emissions and the Benefit-inKind (BIK) tax on these vehicles. For instance, in the tax year 2027/28, a PHEV is presently subject to a BIK rate of 5% to 17%. However, this rate could increase to 24%-26% using the private electric only usage data, and even to 37% based on the fleet electric only usage figures.
3. Road Fund Licence Changes:
In 2025, we’ll see the introduction of road fund licence car tax for electric vehicles, which is currently free. Additionally, the expensive car supplement, applicable to cars with a retail price of £40,000 or more, will also be introduced for electric cars registered from April 2025. Given that a significant portion of electric cars sold in the UK exceed this price, this could lead to an increase of around £600 per annum from year two operation of the car.
As we navigate these changes, the importance of staying informed and prepared cannot be overstated. The fleet management landscape is shifting rapidly, and those who adapt will lead the way into a more sustainable and efficient future.
Understanding the landscape of these changes is key to staying ahead. If you’re curious about how ERA Group could help your business navigate this evolving territory, I encourage you to reach out today.