Rachel Reeves has been blamed for causing “irreversible damage” to the car industry due to new car tax changes. The Chancellor confirmed new electric Vehicle Excise Duty (eVED) charges would be applied to EV cars from 2028, with drivers charged 3p per mile to use the roads.
The new costs have been introduced by the Government to offset the loss of fuel duty revenues as more drivers switch to electric cars. However, Caroline Sandall-Mansergh, Consultancy and Channel Development Manager at Alphabet (GB), has warned that Reeves’ plan could damage demand for electric models among consumers.
Caroline said: “However, the current eVED proposal raises some serious concerns. We believe now is the time to stop and rethink the approach before irreversible damage can be done to EV uptake.”
Alphabet has warned that a new per-mile charge could affect consumer sentiment, given the EV market’s fragility. They warned that leasing companies are already having to face the impacts of used EV depreciation and margin pressures and stressed that introducing a new tax would suppress demand even further.
The Office for Budget Responsibility (OBR) has already claimed that 440,000 fewer electric cars would be sold under the eVED plan. Car dealers have also reported noticing a slight drop in demand for electric vehicles since Reeves’ new plan was revealed.
The consultation into the new eVED scheme is set to end on March 18, but Alphabet has called for the Government to take action.
They have called on officials to engage closely with industry bodies and consider alternative frameworks that are simpler to enforce and less susceptible to fraud.
They suggested that phased adjustments to existing Vehicle Excise Duty structures, or models aligned more closely to energy usage, could be considered as new options.
Caroline added: “We share the Government’s ambition for a successful transition to electric mobility, but taxation policies must be practical, realistic and supportive of growth.
“A rushed or overly complex system risks slowing adoption, deterring investment and placing unnecessary strain on an already stretched sector. There is still time to get this right.”