Transport Committee - Plug-in vehicles, plugged in policy?Written evidence from the Department for Transport

1. The Government has committed £400 million over the lifetime of this Parliament to support ultra-low emission vehicles (ULEVs). This includes funding for a consumer incentive of up to £5,000 for eligible cars and up to £8,000 for eligible vans; £30 million to kick-start the installation of recharging points throughout the UK; and £82 million for research, development and procurement programmes. Work is also underway to encourage UK businesses to seize commercial opportunities in the ULEV sector, and to develop and strengthen the capability of ULEV manufacturing and its associated supply chain in the UK.

2. The Office for Low Emission Vehicles (OLEV) was formed in 2009 to simplify policy development and delivery in this area. It is a cross-departmental unit comprised of staffing and funding from the Departments for Transport, Business Innovation and Skills, and Energy and Climate Change. OLEV also has responsibility for the EU CO₂ car and van Regulations, measures which save the largest amounts of CO₂ emissions in road transport.

Transport’s Role in Meeting UK Carbon Targets

3. Domestic transport emissions make up 25% of the UK’s total CO₂ emissions and 21% of total greenhouse gas emissions.1 Between 1990 and 2009, greenhouse gas emissions from transport have increased by 13%, whilst there has been a 25% fall in total greenhouse gas emissions.

4. Of these domestic transport emissions in 2009, road transport made up just over 90%, with car travel accounting for over a half (58%) and heavy goods vehicle and light van traffic accounting for just under a third (30%).2

5. In the short term, the major driver of emissions reductions for both cars and vans will be EU new vehicle CO₂ targets. However, to meet the Government’s challenging climate change targets, the market for ULEVs needs to start now in the UK. The vision to 2050 was set out in the Government’s 2011 Carbon Plan:

“by 2050 almost every car and van will be an ultra low emission vehicle (ULEV), with the UK automotive industry remaining at the forefront of global ULEV production, delivering investment, jobs and growth. Due to the time needed for fleet turnover, this requires almost all new cars and vans sold to be near-zero emission at the tailpipe by 2040. These ULEVs could be powered by batteries, hydrogen fuel-cells, sustainable biofuels, or a mix of these and other technologies. We cannot say for sure which technologies will emerge as the most effective means of decarbonising car travel, so it is essential that the Government takes a technology neutral approach, allowing us to achieve emissions reductions in the most cost-effective way.”3

6. By pursuing a framework for improvements in average fuel efficiency as opposed to specific technology targets, the Government intends to create the incentives for industry to develop the technologies that reduce emissions, work for consumers and make economic sense. Technologies could include electric, hydrogen, hybridisation, and sustainable biofuels and we are likely to see these used for different transport applications. Both the Plug-In Car and Plug-In Van Grant are technology neutral.

7. The Automotive Council Technology Development Roadmap (see Annex A) demonstrates the industry consensus on how alternative technologies in ULEVs are likely to develop over the next 30 years.

Government Action

8. Upfront cost and concerns about the distance vehicles can travel before re-charging (range) remain key issues for potential buyers. The Government has taken steps to address these issues through the programme:

upfront cost: reducing the purchase price of vehicles through the Plug-In Car Grant (25% Grant, up to £5,000) and Plug-In Van Grant (20% Grant, up to £8,000) (more information at Annex B). ULEVs are more expensive than conventional vehicles but have lower running costs;

re-charging: supporting eight Plugged-In Places (more information at Annex C). The scheme offers match-funding to local consortia of businesses and public sector partners to support the installation of a critical mass of electric vehicle recharging infrastructure in lead places across the UK; and

tax treatment: ULEV’s receive favorable tax treatment, including an exemption from Vehicle Excise Duty, reduced Company Car Tax and exemption from the Van Benefit Charge. These are detailed at Annex D.

9. Internationally, similar incentives are being offered by a number of countries. These are detailed at Annex E.

10. In addition, the Government is funding a programme of research and development to support this new generation of vehicles. This is delivered through the Technology Strategy Board. We are also working closely with industry and other government departments to support the development and strengthening of UK-based supply chains for ULEVs, maximising business opportunities and maintaining competitiveness in the transition to a green economy.

Progress

11. As at 31 March 2012, 1,276 applications had been made for the Plug-In Car Grant, with Society of Motor Manufacturers and Traders (SMMT) data showing that 1,412 cars eligible for the Grant were registered over the same period.

12. Relative to the number of ULEVs registered in previous years, this is a step change and is part of a wider trend. SMMT data also shows that alternatively-fuelled vehicles represent a growing share of the total market, with registrations rising to 1.3% market share in 2011 after an 11.3% rise in volumes over the year.4

13. This demonstrates that the consumer incentive is having a positive effect on the ULEV market, although uptake has been slower than we would have liked to see. We expect sales volumes to increase through 2012 as less expensive vehicles eligible for the Grant are launched in the UK, as well as the first plug-in hybrids and range-extended electric vehicles. These vehicles will not be restricted in the distance they can travel, and may prove more attractive to the UK market than pure battery-electric vehicles which need to be charged after 75 to 100 miles.

14. More innovative finance options are also emerging from vehicle manufacturers to help reduce the upfront cost and to re-assure consumers about the battery. For example, Renault are planning to lease the battery in their vehicles to customers—thereby reducing the initial cost and alleviating any concerns about the technology.

15. Manufacturers have also announced plans for around another 20 car models to be launched by the end of 2013, which may be eligible for the Grant—thereby significantly increasing the choice available for consumers.

16. Figures are not yet available for the uptake of vans through the Plug-In Van Grant. However, vans are well suited to ultra-low emission technologies, due to their regular route and stopping patterns, back-to-base operation and the importance placed upon total cost of ownership by fleet and business purchasers. We therefore expect uptake to increase with support from the Grant.

17. The Plugged-In Places (PiP) programme has significantly increased the number of recharging points in the UK. Our assessment is that the number of installed chargepoints in the UK is more than 3,000 (including publically accessible, domestic and private workplace chargepoints). Of these, 1,673 have been delivered (to the end of March 2012) through the PiP programme, and the remainder by private sector organisations and other local authority schemes.

18. We have seen the emergence of private sector providers of charging points, such as Chargemaster’s national “POLAR” scheme which will be the UK’s first privately-funded large scale plug-in vehicle charging network. The roll out of POLAR will initially be in approximately 100 towns and cities, providing around 4,000 electric vehicle charging bays. Both Little Chef and Welcome Break have announced a network of recharging points at their motorway service stations.

Current Issues

19. There remains a lack of awareness of the benefits and availability of ULEVs among the general public which needs to be overcome to increase the sales of vehicles. This is something we intend to take forward with the vehicle manufacturers as they bring their vehicles to market. This will need to include working with both private and business consumers to help them understand their typical journey needs and where different vehicles could meet them.

20. Another important issue for consumers contemplating buying a plug-in vehicle is the ability to recharge away from home. The National Chargepoint Registry (NCR) will be launched later this year and will enable all chargepoint manufactuers and infrastructure scheme operators to make data on their chargepoints available in one place. The data will be made freely available via data.gov.uk for private sector organisations to add to websites, satellite navigation systems and for the production of smartphone apps.

21. Work is also ongoing to determine appropriate standards for recharging and for interoperability between recharging schemes. Recent progress includes the publication of the Institution of Engineering and Technology’s Code of Practice for Electric Vehicle Charging Equipment Installation. Action at a European level has been slower than expected.

Further Work

22. Further work is required in order to see the widespread adoption of ULEVs. This includes addressing consumer concerns about the distance vehicles can travel between charges (range anxiety), longevity of the battery, ability to recharge vehicles safely, quickly and easily, and the upfront cost of vehicles. Government will continue to look into innovative ways to tackle these to support this early market, working closely with industry.

23. For example, we have learnt about how drivers want to recharge through the PiP programme and so are examining options for delivering a strategic rapid charger network that would support longer journeys through shorter (around 30 minutes) recharging times.

24. Work on reviewing the Infrastructure Strategy will start in the Autumn. We will use the evidence we are gathering from the PIPs and the private sector to refine the strategy and to inform decisions on the role Government should play in the recharging market.

25. Later this year we also expect decisions to be made at EU and international level concerning infrastructure standards. This should give manufacturers greater certainty for product planning and allow for cross-border interoperability.

3 May 2012

Annex A

AUTOMOTIVE COUNCIL TECHNOLOGY DEVELOPMENT ROADMAP

26. In 2009, the automotive industry-led New Automotive Innovation Growth Team (NAIGT) published An Independent Report on the Future of the Automotive Industry in the UK. This set out its 20 year vision for the automotive industry and contained recommendations to Government and industry to achieve it. The Automotive Council was formed to take forward these recommendations and also set five strategic areas for further study and R&D.

27. The Automotive Council technology development roadmap (below) shows how alternative technologies in ULEVs are likely to develop over the next 30 years.

Annex B

PLUG-IN CAR GRANT AND PLUG-IN VAN GRANT

Plug-In Car Grant: Launched on 1 January 2011, the grant helps both private consumers and businesses purchase an electric, plug-in hybrid, or hydrogen-fuelled car. Buyers receive a grant of 25% of the vehicle price, up to a value of £5,000. Cars have to comply with performance, environmental and safety standards in order to be eligible for subsidy. These criteria are:

Vehicle Type: New cars only (“M1” category vehicles, this includes pre-registration conversions) ie excluding motorcycles, quadricycles and vans;

Carbon Dioxide tailpipe emissions: Less than 75g/km;

Range: EVs minimum 70 miles, PHEVs minimum electric range 10 miles;

Minimum top speed: 60mph;

Warranty: three year or 60,000 miles vehicle warranty, plus, a three year battery and electric drive train warranty with a consumer option for a two year battery warranty extension;

Battery performance: Either a minimum five year warranty on the battery and electric drive train as standard OR additional evidence of battery performance to illustrate reasonable performance after three years of use;

Electrical Safety: Vehicles must comply with UN- ECE Reg100.00 (PHEVs will be required to show they have met the technical requirements of 01 series amendments to UN- ECE Reg 100); vehicle manufacturers will be required to identify risks associated with vehicle use and state mitigating actions;

Vehicle crash safety: European Commission whole vehicle type approval (EC WVTA, not small series) OR evidence that the car demonstrates appropriate levels of safety as judged by international standards.

The 10 cars currently eligible for the grant are:

Chevrolet Volt: http://www.chevrolet.co.uk/experience-chevrolet/future-and-concept-cars/future-car-volt-production-model.html

Citroen cZero: http://www.citroen.co.uk/home/#/new-cars/car-range/citroen-c-zero/

Mia: http://www.mia-voiture-electrique.com/en/models/mia

Mitsubishi i-Miev: http://www.mitsubishi-cars.co.uk/imiev/

issan Leaf: http://www.nissan.co.uk/vehicles/electric-vehicles/electric-leaf/leaf.html#vehicles/electric-vehicles/electric-leaf/leaf

Peugeot iOn: http://www.peugeot.co.uk/vehicles/peugeot-car-range/peugeot-ion/

Renault Fluence: http://www.renault-ze.com/en-gb/gamme-voitures-electriques-renault-z.e./fluence-z.e./presentation-1935.html

Smart fortwo electric drive: http://uk.smart.com/smart-world-environment-smart-electric-drive/02c494d2–2eb7–5785–8988–0c63d3b6dd53?csref=thesmart_electric

Toyota Prius Plug-In Hybrid: http://www.toyota.eu/green_technologies/plugin_hybrid_vehicles/Pages/Prius_plug-in_hybrid.aspx

Vauxhall Ampera: http://www.vauxhall-ampera.co.uk/index.php/eng/home

Plug-In Van Grant: Launched on 21 February 2012, the grant helps both private consumers and businesses purchase an eligible electric, plug-in hybrid, or hydrogen-fuelled van. Buyers receive a grant of 20% of the vehicle price, up to a value of £8,000. Vans have to comply with performance, environmental and safety standards in order to be eligible for subsidy. These criteria are:

Vehicle Type: Only new vans are eligible (vehicle category “N1” with a gross weight of 3.5 tonnes or less). This includes pre-registration conversions (normal, internal combustion engine vans that were converted to battery or hybrid versions by specialist convertors before the van’s first registration).

Carbon Dioxide tailpipe emissions: Less than 75g/km;

Range: Eligible fully electric vans must be able to travel a minimum of 60 miles between charges. Plug-in hybrid electric vehicles (PHEVs) must have a minimum electric range of 10 miles;

Minimum top speed: 50mph;

Warranty: Vehicles must have:

a three-year or 60,000-miles vehicle warranty (guarantee); and

a there-year battery and electric drive train warranty, with the option of extending the battery warranty for an extra two years;

Battery performance: Vehicles must have either a minimum five-year warranty on the battery and electric drive train as standard or extra evidence of battery performance to show reasonable performance after three years of use;

Electrical Safety: Vehicles must comply with certain regulations (UN-ECE Reg 100.00) that show that they are electrically safe; and

Vehicle crash safety: To make sure vans will be safe in a crash, they must either have EC whole vehicle type approval (EC WVTA, not small series) or evidence that the car has appropriate levels of safety as judged by international standards

The seven vans initially eligible for the grant are:

Azure Dynamics Transit Connect Electric: http://www.azuredynamics.com/products/transit-connect-electric.htm

Daimler Mercedes-Benz Vito E-Cell

Faam ECOMILE: http://www.faam.com/index.php?action=index&p=209

Faam JOLLY2000: http://www.faam.com/index.php?action=index&p=212

Mia U: http://www.mia-voiture-electrique.com/en/models/mia-k

Renault Kangoo ZE: http://www.renault-ze.com/en-gb/z.e.-range/kangoo-z.e./kangoo-van-z.e.-1939.html

Smith Electric Smith Edison: http://smithelectric.com/smith-vehicles/models-and-configurations/

Annex C

PLUGGED-IN PLACES

The scheme offers match-funding to local consortia of businesses and public sector partners to support the installation of a critical mass of electric vehicle recharging infrastructure in lead places across the UK. A total of £30 million has been made available over the three year scheme, due to finish in March 2013.

Data derived from the programme about how drivers use and recharge their electric vehicles will inform any design of a national system of recharging infrastructure. The eight Plugged-In Places are:

London: https://www.sourcelondon.net/

North East: http://www.chargeyourcar.org.uk/

East of England: http://www.sourceeast.net/

Milton Keynes: http://chargemasterplc.com/charging-schemes/milton-keynes/

Midlands: http://www.pluggedinmidlands.co.uk/

Northern Ireland: http://www.nidirect.gov.uk/ecar

Scotland: www.transportscotland.gov.uk/roads/sustainable-transport/Alternative-Fuels

The chargepoints installed to date by Plugged-In Places areas are detailed below. The eight schemes are at varying stages of maturity, which is reflected in the number of chargepoints they have installed so far.

Plugged-In Place	Chargepoints installed (up to end March 2012)
East of England	135
London	640
Manchester	0
Midlands	100
Milton Keynes	115
North East	399
Northern Ireland	85
Scotland	199
Total	1673

Locations covered	Lead organisation	Defining features
London (Greater London): Source London	Transport for London	—	Large scale publicly accessible charge point network across the city. Currently includes 22 of 33 London boroughs;
		—	Soon to be installing domestic and workplace chargers too;
		—	Membership scheme opened in spring 2011. EV users will be able to charge their vehicle at points across the capital for an annual membership fee of £10;
		—	The project is looking at two innovative ideas, an inductive charging trial with TfL electric vehicles and a study of the feasibility of battery swap in London buses.
Milton Keynes (Milton Keynes)	Milton Keynes Council	—	Installing public infrastructure in Central Milton Keynes and the Milton Keynes Boroughs;
		—	Testing issues around integrating equipment from different sources under a common back office system;
		—	Looking at interoperability with neighbouring Plugged-in Places.
North East England (the North East, centred on Tyneside): Charge Your Car	Gateshead College	—	Transferred from One North East (RDA) to Charge Your Car (North)—part of Gateshead College;
		—	Includes electric vehicle technical training at Gateshead College, a test track facility and a battery 4R project (Reduce, Reuse, Recycle, Replace);
		—	Trialling “Pay as you Go” charge points;
		—	Leading on design of a Northern Rapid Charger corridor.
East of England (Essex, Norfolk, Suffolk, Cambridge, Peterborough, Thurrock, Southend on Sea, Bedford and Luton, Hertfordshire and Watford, London Stansted airport): Source East	Evalu8 Transport Innovations Ltd.	—	Private sector led, with EValu8 aiming to provide an integrated one-stop-shop for potential EV owners;
		—	Project will focus on interoperability with neighbouring projects;
		—	Supported by local authorities as well as vehicle manufacturers and other businesses;
		—	Source East membership scheme (£10 per year) using the London branding was launched last July.
Manchester (Greater Manchester)	Oldham Metropolitan Borough Council/Manchester Electric Car Company	—	Looking at integrating billing with Manchester’s existing smartcard-based transport system;
		—	Testing a model focussed around bespoke retail sites designed to build the local market for electric vehicles.
Midlands (Birmingham, Coventry Derbyshire, Leicestershire, Lincolnshire, Northamptonshire, Nottinghamshire, Rutland, Herefordshire, Shropshire, Staffordshire, Stoke, Warwickshire, Worcestershire,) Plugged in Midlands	Cenex	—	Aim to build strong supply chain links to the existing auto-industry in the region, creating jobs;
		—	Plan to incorporate EV charging infrastructure in new housing developments;
		—	Working on interoperability with several neighbouring PIP projects.
Central Scotland (all of Scotland)	Transport Scotland	—	Plan to roll out EV infrastructure across Scotland with a focus on 6 cities and 2 major conurbations, the primary road network and ferry services, as well as links to northern England and Northern Ireland;
		—	Carbon savings—the region generates a significant proportion of its electricity renewably (31%) and has set itself a renewable electricity target for the next decade of 80%.
Northern Ireland (all of Northern Ireland, with a focus on border towns): e-car	Northern Ireland Executive (Department for Environment/Department for Regional Development)	—	Working closely with the Republic of Ireland to ensure cross-border interoperability—the project aims to electrify cross-border trade;
		—	Developing plans for a network based mainly on fast charging units;
		—	Looking to test a user prepayment system.

Annex D

CURRENT GOVERNMENT OFFER

The table below summarises the package of financial incentives that are available for buyers that choose a plug-in car or van instead of a petrol or diesel equivalent. For illustrative purposes, the table identifies potential savings for a Nissan Leaf electric car (list price £30,990) when compared to the best selling equivalent in its segment—Ford Focus Zetec 1.6l (list price £18,637). The table also identifies potential savings for an electric Ford Connect van compared to a diesel Ford Connect.

	Plug in Car	Plug in Van
The following incentives are available to all buyers
Plug in Grant	Up to £5,000	Up to £8,000
Vehicle Excise Duty exemption	£135 saving each year.	£135 saving each year.
Lower fuel tax and costs—EVs typically cost 2–3p a mile compared to 13p for conventional car, saving £100 for every 1,000 miles.	£1,200—over 12,000 miles	£1,200—over 12,000 miles
In addition, the following incentives are also available to business buyers:
Enhanced Capital Allowance VAT registered businesses can write-down the whole purchase price of an EV against tax in the first year—confirmed until 2015.	Approx £4,000 additional benefit for a firm purchasing a Nissan Leaf instead of the Ford Focus (at 2011–12 rates).	Approx £5,000 additional benefit for a firm purchasing a Ford Connect electric instead of a diesel version (at 2011–12 rates).
Employer Company Car Tax & Fuel Benefit Charge. National Insurance Contribution exemption for the employer when providing a zero emission company car until 2015.	Approx £600 per year saving for the employer when an employee (40% income tax bracket) opts for a Nissan Leaf instead of the Ford Focus.	NA
Employee Company Car Tax & Fuel Benefit Charge—will remain zero rated for employees receiving a zero emission company car until 2015.	Approx £2,500 per year saving for employees (in 40% income tax bracket) who opt for Nissan Leaf instead of Ford Focus.	NA
Van Benefit Charge—when employers provide employees with a van for private and business use, a £3000 Van Benefit Charge is payable. Electric vans are exempt until 2015.	NA	£3,000 saving for an employee who opts for an electric van.
Ultra Low Emission Vehicles can also benefit from local measures, including:
London Congestion Charge—Electric and Plug in Hybrid vehicles receive a 100% discount.	Save £2,000 for a vehicle entering zone 200 days in a year.	Save £2,000 for a vehicle entering zone 200 days in a year.

Annex E

SUMMARY OF G20 COUNTRY ELECTRIC VEHICLE POLICIES

Source: International Energy Agency, http://www.iea.org/papers/2011/G20_paper.pdf

The UK’s approach to encouraging ULEV uptake is similar to that employed in other EU countries, and internationally. Financial incentives, such as the Plug-In Car Grant, are available in EU countries including France, Italy, Spain, and the Unites States:

	Electric Vehicle Sales/stock targets	Fiscal Incentive	Other targets/data
Argentina	N/A	N/A	Renault-Nissan research deal
Australia	Up to 60% stock by 2050	N/A	Electric vehicle trail funded through the Smart Grid, Smart City programme that commenced early 2011. Current priorities are:
			—	To examine market barriers to the broader adoption of electric and natural gas vehicles—to be conducted by the Australian Energy Market Commission (AEMC).
			—	To support electric vehicle demonstration projects to explore business models and integration with electricity/gas distribution networks.
Brazil	N/A	N/A	Fiat Brazil to produce and sell electric cars
Canada	Stock target of 500,000 by 2018	$5,000 to $8,500 (CAD) for the first 10,000 units	Vancouver is the first North American city to link development rules to EV infrastructure
China	Stock target of 10,000,000 hybrids, plug-in hybrids and EVs by 2020. About half are expected to be plug-in hybrid vehicles.	Maximum Yuan 60,000 (USD $9,100) per vehicle in five pilot cities (total 1.76 billion by 2012)	Pilot programme for electric vehicles in five cities
EU	3,300,000 EVs (CE Delft projection)	Electromobility initiative, Green eMotion, supported through €41.8m	Rules on the interoperability of charging infrastructure for clean vehicles.
France	Stock target of 2,000,000 PHEVs/EVs by 2020	Incentive budget €560m; tax credit to 2012 €400m	Government fleet commitment of 50,000 electric vehicles
Germany	Stock target of 1,000,000 PHEVs/EVs by 2020	Tax exemptions until 2015	€500m EV infrastructure plan announced
India	Indian manufacturer Reva is aiming for 5,000 EVs by 2012	100,000 INR ($2,200 USD) per vehicle (total 840 vehicles to 2012)	VAT rates for EVs reduced in several states
Indonesia	Audi is aiming to produce 2,700 EVs for the domestic market	N/A	Indonesia is the first country in South East Asia to have the Smart Electric Drive
Italy	Specific target for EVs unclear	€1,500 to €4,500 per vehicle for low CO2 vehicles, budget of €0.3–0.5bn	400 charging points in Rome, Pisa and Milan
Japan	PHEV/EV sales target of 15–20% of total LDV sales in 2020	Incentive budget of $300m (USD) per year (2010)	2 million normal chargers and 5000 quick chargers by 2020.
Korea	1,200,000 green cars (EV, PHEV, FCEV, CDV) by 2015	N/A	KRW 400bn ($342.6m USD) by 2014 on research and development for high-performance batteries and other related systems
Mexico	N/A	N/A	N/A
Russia	Up to 100,000 hybrid cars per year (E-mobile)	N/A	Government backs production of hybrid cars with electric transmission
Saudi Arabia	N/A	N/A	N/A
South Africa	N/A	N/A	Research centre established
Spain	Stock of 250,000 Evs/PHEVs by 2014 and 2,500,000 by 2020	€6,000 per vehicle	Smart cities and smart grid research; MOVELE Demonstration Project and the “Integral Strategy to Impulse the EV/PHEV in Spain 2010–14”
Turkey	N/A	Lowered tax rates for EVs	Domestic manufacturing of EVs has begun
United Kingdom	N/A	Customer incentive of up to £5,000 ($7,700 USD) per eligible ultra-low emission vehicle	£400m to support consumer incentive, infrastructure and research and development up to 2015. London Mayor committed to 25,000 charging points in London by 2015
United States	Stock target of 1,000,000 by 2015	$7,500 USD per vehicle	American Recovery and Reinvestment Act included $2.4bn for battery and electric drive component.