Reports that the Treasury may consider a pay-per-mile or fuel duty-style tax for electric vehicles continue to be met with criticism across the motoring and fleet sectors.

As widely reported yesterday, the UK government is exploring the introduction of a levy on EV driving, setting a 3p per mile fee in a move to fill a gap in fuel duty revenues caused by the transition away from petrol and diesel. An announcement is expected in the Autumn Budget later this month and the new scheme could kick in from 2028, pending a public consultation.

The reports caused consternation across the auto industry.

Europcar Mobility Group UK said the proposals “will do nothing to encourage businesses and motorists to switch to zero emissions now”.

Tom Middleditch, sustainability spokesperson, added: “Unquestionably, the Government has some difficult decisions to make to plug public finances, but we have a deep concern that a tax on mileage of electric vehicles will create doubt in people’s minds and be another deterrent to adoption of zero tailpipe emissions motoring right now.”

Europcar research shows that cost is one of the main barriers to EV adoption – and the business has taken action to remove cost concerns from electric rental by offering price parity with ICE vehicles for B2B customers.

Middleditch also said that with the Government’s ZEV mandate targets unlikely to be met this year for a variety of reasons, it’s critical nothing is done at this point to discourage businesses and motorists from making the switch.

“Putting a tax on mileage also feels counter-intuitive to the Government’s zero emissions ambitions.”

Middleditch also said it was unclear how an EV pay-per-mile tax would be implemented for rental vehicles.

“Rental is an effective transitionary solution to EV adoption, helping employers make the switch in a way they can afford, and which fits with business requirements. It also gives private motorists the opportunity to learn about electric motoring in real-world conditions that dealer test-drives simply can’t provide. We will, therefore, actively work with relevant industry bodies to respond to any government consultation to ensure that the broad impact of an EV mileage tax is fully understood.”

Paul Holland, managing director for UK/ANZ fleet at Corpay, including Allstar, has also warned that an EV tax would risk stalling the UK’s transition to cleaner transport.

Holland said the Autumn Budget was the Government’s chance to back electric adoption, not burden it, and noted that higher running costs would push both drivers and fleets to delay the switch.

“The Autumn Budget is where the Government sets out its priorities and right now, taxing EV drivers would send all the wrong signals. The idea of a pay-per-mile or EV-equivalent to fuel duty might look like a quick fix for Treasury finances, but it risks derailing the very progress the UK needs to hit its climate and transport goals.

“The industry has been working hard to make electric vehicles viable, from infrastructure to affordability to consumer confidence, and that momentum is fragile. If the cost of running an EV rises, people will simply wait longer to switch.

“The Government can’t ask drivers and fleets to go electric, then punish them for doing so. This is the moment to keep incentives in place and make the transition easier, not harder.”

Many others in the automotive and EV sectors have slammed plans for a new EV tax.

The Society of Motor Manufacturers and Traders (SMMT) said it would be “entirely the wrong measure at the wrong time”.

The motor sector trade body added: “Introducing such a complex, costly regime that targets the very vehicles manufacturers are challenged to sell would be a strategic mistake – deterring consumers and further undermining industry’s ability to meet ZEV mandate targets, with significant ramifications for perceptions of the UK as a place to invest.

“A smarter, fair and future-ready taxation system requires a fundamental rethink – one that must be done in full partnership with the industry and other stakeholders.”

Octopus Electric Vehicles also slammed the rumoured plans.

James Court, head of policy at the electric car leasing firm, said: “EV drivers should pay – but it should come at the right level and the right time. Now would be far too soon – EVs represent only 4% of cars on our roads and a tax would raise a minimal amount until this number is bigger. As we’ve seen in other countries, introducing a charge now would stifle the growth we’ve seen over the past years, and be self-defeating.

“What is needed is a considered plan for the best and fairest way for all road users to handle the change in vehicle mix over time.”

Melanie Lane, chief executive at charging firm Pod, said the Government should reward, not punish, those making the EV switch.

“It’s another example of policy that isn’t joined up: feeding with one hand while taking away with the other. This move undermines both the Government’s own EV transition goals and driver confidence, just as adoption is accelerating.

“A government spokesperson has suggested this will create a fairer system for all drivers – so we also expect to finally see the end of the fuel duty freeze, with no further extensions announced in the upcoming Budget.”

And the Energy and Climate Intelligence Unit (ECIU), a research and analysis organisation, said that EVs would still be £1,000 cheaper to run per year than petrol cars under the new tax, but warned of “mixed messaging”.

Colin Walker, head of transport at the research and analysis organisation, elaborated: “Many experts are understandably concerned that this could send the wrong signal to drivers thinking of making the switch to EVs, with the Government repeating the chopping and changing of EV policies that we saw under the previous administration.”

He added: “This announcement comes shortly after the Government gave in to industry lobbying by weakening its EV sales targets. This could enable industry to push more hybrids on drivers that burn five times more fuel than their manufacturers claim, and cost hundreds of pounds more a year to run than EVs.

“Longer-term, it would be expected that all road users make a contribution, but Government risks sending mixed signals and undermining consumer confidence by trying to encourage drivers into EVs with one policy, and possibly putting them off with another. The net result could be to keep people stuck in dirtier and more expensive petrol cars for longer.”