The Chancellor's new pay-per-mile tax for electric vehicles could discourage motorists from making the switch, the President of the AA has cautioned. Edmund King warned that announcing the extra levy years in advance might create a new wave of "hesitant drivers" who delay purchasing an electric car.
Details of the New Road Tax Levy
In the November Autumn Budget, Chancellor Rachel Reeves confirmed a new charge for electric and hybrid vehicles to protect Treasury revenues as fuel duty from petrol and diesel declines. The policy, effective from April 2028, will see drivers of fully electric vehicles charged 3p for every mile they travel. Hybrid vehicle owners will face a lower rate of 1.5p per mile.
Speaking to the Daily Express, AA President Edmund King acknowledged that, financially, running an EV would still be advantageous. He noted that even with the new charge, it remains far cheaper than fuel duty, which costs petrol or diesel drivers approximately 6p per mile. He also highlighted falling costs for EV insurance and new cars.
However, King expressed concern about the psychological impact of announcing the tax so far ahead of its implementation. "Having said that, talking about an extra tax three years before it is introduced might get some hesitant drivers to avoid switching," he stated.
Potential Impact on Electric Vehicle Sales
The warning is supported by official forecasts. King pointed to estimates from the Office for Budget Responsibility (OBR), which suggest the new levy could reduce electric vehicle sales by around 120,000 units over a five-year period. This calculation already factors in existing government grants and incentives designed to boost EV adoption.
The per-mile charge means drivers will be billed for every journey. For example, a long-distance trip from London to Edinburgh could incur an additional fee of up to £12 for an EV driver on top of any other road charges.
Industry Pushback and Innovative Rebates
Some car manufacturers are already taking proactive steps to counteract the potential disincentive. Chinese brands Omoda and Jaecoo have launched an innovative EV tax rebate for their new Omoda E5 and Jaecoo E5 models.
This scheme effectively covers the cost of the new tax for the equivalent of 20,000 miles of driving at the 3p rate. Gary Lan, CEO of Omoda and Jaecoo UK, said their rebate offers "thousands of miles of zero-cost motoring" initially, demonstrating a commitment to making electric transport accessible.
While the Treasury maintains the tax is necessary to replace lost fuel duty income, the debate highlights the delicate balance between fiscal policy and the UK's transition to greener transport. The coming years will reveal whether the early announcement stabilises revenues or, as the AA fears, stalls the electric revolution.
