Nissan worried electric car sales could fizzle out

BRITAIN’S electric car industry could stall unless George Osborne performs another Budget U-turn, say automotive bosses.

Trevor Mann and Simon Brooks with a Nissan Leaf electric car

BRITAIN’S electric car industry could stall unless George Osborne performs another Budget U-turn, say automotive bosses.

Car makers Nissan, Toyota and Vauxhall owner General Motors fear sales of electric vehicles could suffer because of changes to incentives set out in this year’s Budget. The Society of Motor Manufacturers and Traders (SMMT) also backed a U-turn. The North East has led development of the electric vehicle industry with Nissan set to build the electric Leaf car at its Sunderland plant. Thousands of jobs are at stake.

A Nissan spokesman said: “In line with the SMMT, Nissan opposes the tax changes proposed for electric vehicles, which would discourage the wider adoption of zero-emission vehicles in the UK. We have already made our views known to the Government on this issue.

“In line with the Government’s commitment to support the introduction of zero-emission vehicles in the UK, we have made representations that this policy be reviewed.”

The concerns emerged when senior executives from General Motors, Toyota and the SMMT yesterday gave evidence to the Commons transport committee as part of an inquiry into low carbon vehicles.

Committee chair Louise Ellman asked if there was anything that Transport Minister Norman Baker – who was appearing before MPs after them – could do to help the sector develop.

Toyota Motor Europe managing director R. Graham Smith said: “We would certainly encourage him to talk to the Chancellor about the announcement made in the Budget in relation to benefit in kind as its applies to zero and ultra-low emission vehicles.

“There have been one or two Budget announcements that have been reconsidered. We would very much wish to see this added to the list.”

Ian Allen, manager of environmental strategy at General Motors, agreed and said negative Budget plans could be reversed.

Last night, a Labour source said: “George Osborne’s Budget goes from shambles to shambles. He has already performed multiple U-turns. Now he needs to look closely at what the car industry says to see if there is a need to do another.” Industry concerns focus on the removal of the first year capital allowance for leased business cars, which allow the cost of such assets to be written off against a firm’s taxable profits. It means companies can spread the bill over the period the investment is made.

But the fear is that axing the measure will push up the cost of providing business cars and depress demand.

Mr Osborne is also pushing ahead with ending a five-year exemption from company car tax for zero carbon and ultra low carbon emission vehicles in April 2015, which will rise to 13% then and a further 2% in 2016-17.

Industry chiefs fear that will increase the already expensive costs of running such a vehicle as a company car and that it runs counter to grants to encourage people to buy such vehicles.

A Treasury spokesman later said electric cars were not liable for fuel duty, road tax and would still enjoy the lowest rate of company car tax.

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