But we know how to solve the EV problem - buy Chinese

Much chuntering about the problem with the electric vehicle market in the UK.

Rachel Reeves has an electric car problem. On the one hand, the Chancellor is part of a Labour government that has pledged to turbocharge the switch to electric vehicles (EVs) in Britain.

But on the other, she is racing to plug a £22bn black hole in the public finances ahead of October’s Budget.

Reeves herself has warned this will require painful choices – but with EV sales already slowing in the UK, experts now fear the Chancellor risks slamming on the brakes with a series of sharp tax rises.

Whether or not EVs really are economic or not is rather clouded by the special tax treatment they get. They’re going to start paying vehicle excise duty for example. And in the longer term there’s that pay per mile (in itself a good idea) tax system a’comin’. EVs will be paying the same as ICEs under that - they must, because the government’s point would be to regain the revenues from fuel duty - and thus EVs are going to lose their artificial price advantage.

At which point adoption is rather going to slow, no?

There’s no real way out of this either. EVs cost vastly more to buy, suffer horrendous depreciation rates and yes, cheaper fuel and lower taxes. Once the tax situation changes they might well not be cheaper. So, err?

Well, there is an obvious idea:

To repeat, the current conversation insists that cheap EVs must be achieved for climate change reasons. China’s taxpayers have spent $100 billion on getting to cheap EVs that we can now enjoy - and also save the climate. But we can’t have those cheap EVs and save the climate…

We just import the cheap Chinese EVs and so save the climate. The people who would lose from this are the local - our own domestic - capitalists who can only make expensive EVs. Oh dear, that is a pity then.

Ricardo for the win again.

Tim Worstall