With UK Government encouragement, media pressure and customer demands the automotive industry is continuing its drive toward cleaner logistics through the use of electric vehicles (EV’s). However, this forward planning is now being impacted by the current energy crisis, writes Nigel Lyons, partner at Browne Jacobson LLP.
Is EV investment still a sound logistic business sense ?
As the automotive industry continues to be innovative those businesses that don’t embrace the fast moving technology that is being offered will be left behind, for example, in the last 12 months Sony announced plans to enter the EV market, with Apple working on a self-driving electric car and Mercedes-Benz’s claiming a EV vehicle range of up to 620 miles.
The ongoing challenges for retailers with large carbon footprints
Whilst automotive manufacturers may be able to demonstrate innovative ways of tackling the limitations with the existing EV infrastructure, mass market EV’s still demand the need for a greater charging network. On that note, in the UK the Office for Zero Emission Vehicles (OZEV) has launched a Local EV Infrastructure Fund to support the roll-out of larger on-street charging schemes and rapid charging hubs across the UK.
The war in Ukraine has brought a further significant issue with the huge increase in the cost of EV charging. This is adding another dimension to the cost of powering vehicles, with businesses having to ultimately pass on the increased expense onto their customers.
The issues surrounding EV charging points
The OZEV Workplace Charging Scheme (WCS) is a voucher-based scheme that helps provide support towards the upfront costs of the purchase and installation of EV charge points. The scheme is run by the OZEV and administered by the Driver and Vehicle Licensing Agency (DVLA). This grant can be used in conjunction with the EV infrastructure grant for staff and fleets. It helps fund both the installation of charge points and the cost of charge point infrastructure.
The EV future
The RAC motoring organisation has identified that the price of using the fastest ultra-rapid chargers now stands at 74.79p per kilowatt hour, up from 50.97p in May 2022 (47%) and 63.94p in September 2022. Drivers using rapid chargers now pay 20p per mile for their electricity, only a penny less than those using less common ultra-rapid chargers who pay 21p per mile. These costs are higher than the equivalent per-mile rate for a petrol car that achieves an economy of 40 miles to the gallon (17p per mile) and are on a par with a diesel car achieving the same economy (20p per mile).
Recent UK new car registration figures show that the demand for EVs is clearly still there, however, even with the OZEV scheme there is a risk that if energy prices remain high this will put businesses off using EV chargers. The Government is being pressed to review the current VAT policy as businesses pay four times the rate of tax as those charging at home.
If the EV use is to expand through our logistic network then the Government will need to be as innovative as automotive manufacturers if it to maintain the drive to bring down air pollution and decarbonise the UK’s transport infrastructure.