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Britain is accelerating towards a petrol ban carmageddon - by Matt Oliver - The Telegraph - 02.07.23

Looming petrol car ban raises doubts over the nation's readiness.

With a year to go before Britain hosted the Cop26 climate conference, Boris Johnson was preparing to make an eye-catching announcement.

The then-prime minister was poised to set out his 10-point plan to spark a green industrial revolution – and the centrepiece was a vow to ban the sale of new petrol and diesel cars by 2030.

A highly ambitious target, this was five years sooner than the deadline he had set just nine months earlier, which car industry bosses dismissed as “a date without a plan”.

It was also a decade before the target outlined by his predecessor, Theresa May, only two years beforehand.

“Our green industrial revolution will be powered by the wind turbines of Scotland and the northeast, propelled by the electric vehicles made in the Midlands and advanced by the latest technologies developed in Wales, so we can look ahead to a more prosperous, greener future,” Mr Johnson said in November 2020.

Boris Johnson and other ministers hoped his 10-point green plan would cement demand for electric vehicles

His speech, the Government said, would put the UK on course to be the fastest G7 nation to decarbonise road transport.

Yet the new sales ban – described by the Society for Motor Manufacturers and Traders as “immensely challenging” – represented a huge gamble, with the potential to either turbocharge or tank Britain’s domestic car industry.

And astonishingly, for such a consequential policy, no detailed proposals to achieve it had actually been drawn up.

Instead, Johnson and other ministers hoped the stretching target would cement demand for electric vehicles, galvanising businesses to manufacture supplies and build the legions of chargers that would be required.

“It’s like the classic example of putting a man on the moon,” one former minister involved in the policy says.

“When Kennedy said ‘We’re going to put a man on the moon’, he did not know how they were going to get there. He just said this is the target – and they got there.”

Electric cars still remain unaffordable for most households, while a huge upgrade of the power grid will be needed in order to boost the number of vehicle chargers in Britain from 42,000 at present to the more than 300,000 being sought by ministers.

Meanwhile, to serve demand for vehicles domestically, around five battery “gigafactories” are needed in the UK – with hundreds of thousands of industry jobs at risk if they are not secured.

Experts say we are now at a crossroads. A report published this week by the Climate Change Committee, the statutory net zero watchdog, said that rising electric car sales were promising but work to build chargers “now needs to scale up more quickly”.

Separately, industry leaders say time is running out for Britain to secure the gigafactories that will be the bedrock of its future car manufacturing base. A failure to do so, while sticking with the 2030 ban on new petrol car sales, threatens a jobs bloodbath.

As the clock ticks down, alarm is growing that Britain will simply not be ready for 2030 – and a delay is increasingly likely.

Carbon cost

The UK’s commitment to reach “net zero” carbon emissions by 2050 will require emissions from vehicles to be almost eradicated.

Surface transport, including cars, accounts for the biggest chunk of Britain’s annual carbon emissions, representing 23pc last year.

This was about 105 million tonnes of carbon dioxide equivalent, the Climate Change Committee’s latest report says, which was 3pc up from 2021 but 8pc below pre-pandemic levels.

The reduction was mostly down to increased working from home, rising fuel prices and so-called low-traffic neighbourhoods, with a small contribution from rising electric vehicle sales.

But a crunch point is fast approaching at which sales of electric cars – which have much lower lifetime emissions than petrol ones – will need to do more of the heavy lifting.

Petrol cars tend to have lifespans of around 14 years, says Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT).

“So immediately that says, well, you’ve got to stop selling internal combustion engine (ICE) cars by 2035, to be able to have most off the road by 2050 and deliver net zero,” he adds.

This 2035 target was effectively adopted earlier this year by the European Union, while Denmark has joined the UK in proposing a more ambitious target of 2030. Norway, where eight in 10 cars bought are already electric, is aiming for a 2025 phaseout.

The UK’s own target had initially been 2040 but this was then changed twice by Boris Johnson, who had a longstanding passion for green issues and was encouraged by his now-wife Carrie Symonds.

Johnson thought Britain could steal a march on the rest of the world by pushing car companies to go electric sooner, by 2030, according to his former allies in government.

“Boris was a great directional leader. He was really good at painting a vision and saying ‘Let’s get there, I don’t care how we get there but let’s get there,’” says one minister who was involved in discussions.

“It would force you to think of how to do it.”

In at least that respect, the policy had immediate effects. Industry groups quickly warned a “Herculean effort” would be required, with the SMMT claiming success would “depend on reassuring consumers that they can afford these new technologies, that they will deliver their mobility needs and, critically, that they can recharge as easily as they refuel”.

Crucially, however, car companies secured an important concession. The sale of hybrid cars – which are part petrol, part battery-powered – would still be allowed until 2035.

This went against the Climate Change Committee’s recommendation that all carbon-emitting cars be phased out by 2032 at the latest. But it gave a stay of execution to several car plants, most of which were soon to produce only hybrids anyway.

Honda and Ford had both warned that job losses could result from an earlier hybrid ban, the Guardian reported. Honda closed its Swindon plant in 2021.

Since then, the Department for Transport has set out proposals for the so-called zero-emission vehicle (ZEV) mandate, which sets quotas for how many electric cars manufacturers must sell.

This would start at 22pc next year and gradually rise annually to reach 52pc by 2028 and 80pc by 2030.

“We’re up for the challenge, but we need to ensure we’re using every lever to move that market and encourage people to make the shift,” says Hawes.

Prohibitive pricing

By far the biggest thing that puts many drivers off buying an electric car is cost.

The top-selling EVs in Britain last year were Tesla’s Model Y and Model 3, which cost about £45,000 and £43,000 respectively, registration statistics show.

Next was Kia’s Niro and Volkswagen’s ID.3, both starting at about £37,000, and market stalwart the Nissan Leaf, which starts at £29,000.

The cheapest four-seater available is the MG4 EV, a Chinese model, at £27,000.

Yet all these remain far more expensive than the lowest-priced petrol cars, with the Dacia Sandero costing about £12,600, the MG3 £13,300 and Kia Picanto £13,400.

“We badly need the cost of electric cars to come down,” says Simon Williams of the RAC.

Like heat pumps, an electrically powered heating solution that the Government has backed to replace gas-fired boilers, proponents often argue that the running costs of EVs are actually cheaper than petrol cars.

Yet the upfront costs remain prohibitive for most families, similarly because the technology is not as mature as the fossil fuel-powered alternatives.

In the case of EVs, the biggest reason for this is the cost of batteries – the most expensive components that go into them.

The Climate Change Committee has said lower battery prices are essential to wider EV uptake, but has flagged this as an issue that is now “slightly off track”.

After a steady decline previously, prices increased in 2022 as global markets were convulsed by supply chain disruptions caused by the aftermath of the pandemic and the war in Ukraine, pushing up the costs of essential metals and other materials.

Meanwhile, although it remains cheaper to run an electric car than a petrol one if you charge it at home, rising electricity prices have made battery power less competitive for those who rely on public chargers.

This disparity is worsened by unequal rates of VAT, as well. Those who charge at home pay a rate of just 5pc, while those who charge using public infrastructure pay 20pc.

Another cost will come in 2025, when electric vehicles lose their exemption from vehicle excise duty under changes announced by the Chancellor Jeremy Hunt in his Autumn Statement last November.

One way of making electric cars more affordable is a salary sacrifice scheme, which allows workers at some companies to lease vehicles and pay out of their gross salary – ensuring it is tax-efficient.

Fiona Howarth, chief executive of Octopus Energy’s electric vehicles business, which leases company cars, says her company works with more than 3,000 businesses and has already leased 10,000 cars since setting up two years ago.

It has secured £650m in funding from investors, with around £400m committed so far.

“Salary sacrifice and other company car schemes are a very popular route for EVs,” she says, “because salary sacrifice actually makes it cheaper on a monthly basis to go for an electric car, versus the petrol or diesel equivalent – and that’s before any fuel saving.”

Those who charge at home can save another £1,000 a year in fuel, Howarth adds. “So that makes it very attractive to make the switch.”

One of the problems for buyers in recent years has been availability, as demand outpaced supplies. Some market players have successfully scaled up output, such as Tesla, which went from producing 100,000 cars in 2017 to 1.4m in 2022.

By comparison, German behemoth Volkswagen said it delivered 572,000 EVs that year but was nursing another 310,000 backorders in western Europe alone as supply chain problems crimped output.

“There is just soaring demand for EVs, and the manufacturers are now kind of scrambling to catch up,” Howarth adds.

Customers who order some upmarket brands can expect to wait as long as two and a half years, while last year it was common to wait nine to 12 months for other models.

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Britain is accelerating towards a petrol ban carmageddon - by Matt Oliver for The Telegrap
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