Drivers of low emission cars could face big increases in their fuel bills in the near future if the Treasury is not to face shortfalls in tax revenue, the RAC Foundation warns.
As ministers encourage the mass market take-up of low-carbon cars such as electric and hybrid models, the Exchequer must decide whether its long-term strategy is to hike the price of ‘green’ fuels, such as electricity, or take a hit on its revenue.
The warning comes as the RAC’s motoring charity publishes a new report, Shades of Green. The report analyses the environmental performance of 51 cars – most of them from major manufacturers, and either already in the showrooms or soon to arrive -over a 57-mile eco-run from Brighton to London.
The run – the inaugural Royal Automobile Club Future Car Challenge – demonstrated just how much cheaper electric cars are to run. On the journey from the coast to the Capital drivers of electric vehicles each spent, on average 3p per mile on fuel.
By contrast drivers of hybrids spent 7p per mile on fuel, and the cost for those behind the wheel of a diesel car averaged 9p per mile.
Professor Stephen Glaister, director of the RAC Foundation, said: “Government faces fundamental issues about how you tax fuel. Currently there is a major push on by ministers to get people to buy ultra-low carbon cars, many of which are electric. A big attraction of these cars is their low running costs. When a driver charges his car battery at home he avoids the large whack of duty payable at the pumps on petrol and diesel. He also pays VAT at the reduced rate of 5 per cent rather than the 20 per cent that fossil fuels attract.
“With just 1,500 electric cars registered in Great Britain at the end of 2010 clearly this is not going to be an overnight problem, but it will have to be tackled sooner or later. Given that there are real doubts that the price of battery-powered cars will fall significantly – because of the high cost of raw materials – drivers are likely to be unhappy with anything that increases their day-to-day outgoings.”
The full Shades of Green report can be found at www.racfoundation.org/research. To be eligible for the Future Car Challenge vehicles had to emit no more than 110 gCO2/km. The next Future Car Challenge takes part on November 5, 2011, visit www.futurecarchallenge.com for more information.
