The new pay per mile tax on EVs will harm sales says the government’s official finance watchdog, the Office for Budget Responsibility.
The OBR’s job is to assess the impact of the government’s budget decisions on the public finances and it has said in its budget analysis that sales of electric cars will be significantly less than previously planned following the introduction of the so-called electric VED.
According to the OBR the new pay per mile tax “is likely to reduce demand for electric cars as it increases their lifetime cost”. The body says that 440,000 fewer EVs will be sold in the next five years than previously forecast and that the government’s £1.3bn of extra funding for the plug-in grant will only create an extra 130,000 sales to offset the fall.
The Treasury has hit back disputing the OBR’s numbers, incidentally, saying that they were wrong and that the impact would be much lower.
The OBR also said in its forecast that the income from the pay per mile charge would be less than the government had forecast because average electric vehicle mileage would drop as a result of the scheme too.
Electrifying.com founder Ginny Buckley has said that the government is sending mixed signals to motorists considering whether to switch to electric. “The mixed messaging we’re getting from the government around EVs doesn’t speed up the switch – it stalls it. A transition of this scale needs a steady hand and consistent policy, not one foot on the brake and the other on the accelerator. That kind of confused approach risks slowing the journey before we’ve even got started, and will make manufacturers’ 80% EV sales target by 2030 even harder to deliver.”
Chancellor Rachel Reeves announced a new pay per mile tax on EVs will be introduced in 2028 
