Mr. Darling Gives EVs A Break, As in Tax Break

By Bill Moore

Posted: 11 Dec 2009

Smith Electric, Modec and Electric Car Company, among others, has a bit more to rejoice about this holiday season. Santa -- in the form of British Finance Minister Alistair Darling -- just gave them a nice little early Christmas present. The government's Pre-Budget report includes two provisions specifically meant to encourage businesses to shift to electric vehicles.

Provision Number 1: Companies are exempt for the next five years from paying taxes on electric cars they acquire for their company fleets. According to a report in Strait Times, "Businesses currently pay National Insurance contributions and employees pay income tax based on the cost of company cars and their CO2 emissions. The range varies from nine percent for electric cars to 10-35 per cent for fossil fuel cars." Those taxes are now waived.

Provision Number 2: Companies putting electric "vans" like those manufactured by Smith Electric and possibly Modec can now write down 100% of their capital allowance (depreciation) in the first year.

Why "possibly Modec" you ask? Because, according to Dan Jenkins with Smith Electric, the government's definition of a "van" has been understood to refer to Class N1 commercial vehicles with a GVW of less than 3,500 kg (7,716 lbs). Smith's converted Ford Transit Connect, marketed as the "Edison" falls into this category. It's larger Newton and Modec's electric truck are both classified as Class N2, which fall between 3,500kg and 12,000kg. The Modec's GVW is 5,500kg, while the Smith Newton can weigh between 7,500kg and 12,000kg.

Dan "bets" that when the government more clearly spells out its rules, an "electric van" will "equate to vehicles up to 5,500kg." That's 12,125 pounds.

As for those company cars, Electric Car Company, which converts Citroen C1's to electric, will likely be a beneficiary. The electric version of four passenger C1 costs £16,850, ($27,400US), or about twice the price of a gasoline version. It has a top speed of 60 mph (96 km/hr) and a range of about 70 miles (112km). A previous government proposal provided a £5,000 grant, which doesn't, unfortunately take effect until 2011.

On the plus side, it costs only 90p ($1.48) to charge up the car's battery pack. To drive the same distance at current petrol prices in the UK would run a British motorist £5 ($8.13). Electric car drivers are also exempt from London's daily £8 congestion charge.

Of course, the other issue with electric cars and trucks is a need for a charging infrastructure, which becomes less of a challenge in corporate fleet operations where refueling can be more easily accomplished at a central location. Here too the British government and especially the city of London and several of its boroughs have implemented initiatives to help with the installation of public charging stations.

All this would appear to bode well for companies like Smith, Modec and ECC, but it also underscores how critical it is to get the costs of EV technology to the point it is competitive with IC engines. As the British experience suggests, high petrol/gasoline prices alone aren't enough to tip the economics in the electric car's favor, though it certainly has to help.

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