Chancellor Rachel Reeves has unveiled a controversial new pay-per-mile driving tax for electric and hybrid vehicles as part of the Autumn Budget, drawing immediate criticism from automotive industry leaders.
What the New Levy Involves
The new policy, scheduled to come into effect from 2028, will see electric vehicle (EV) drivers charged 3p per mile, while hybrid drivers will pay 1.5p per mile. The government's stated rationale is to offset the significant loss of fuel duty revenue as more motorists transition away from traditional petrol and diesel vehicles.
However, this approach has been met with strong opposition from electric car manufacturers who argue the timing could seriously undermine the UK's transition to cleaner transport.
Industry Leaders Voice Concerns
Matt Galvin, Managing Director of Polestar UK, told Express.co.uk that the tax represents "the wrong message at the wrong time." He expressed particular concern about introducing disincentives while the government's Zero Emission Vehicle (ZEV) Mandate requires that 28% of new cars sold this year must be electric.
"We are really trying to encourage EV adoption," Galvin stated. "I just feel when you have these disincentives, it makes people think twice. Things like this will make them second-guess that judgement, they will think 'oh I'll have another petrol or diesel or plug-in hybrid for now'."
Current sales figures highlight the challenge, with less than 22% of new cars sold year-to-date being electric, already falling short of the ZEV Mandate target.
Manufacturers Fight Back with Rebates
In direct response to the announced levy, two Chinese EV manufacturers - Omoda and Jaecoo - have introduced an innovative EV tax rebate on their new Omoda E5 and Jaecoo E5 models.
This initiative will effectively cover the cost of the new tax for drivers by offering the equivalent of 20,000 miles at three pence per mile.
Gary Lan, CEO of Omoda and Jaecoo UK, explained their approach: "Our EV Tax Rebate for the Omoda E5 and Jaecoo E5 effectively covers the first few years of this new tax, giving drivers the equivalent of thousands of miles of zero-cost motoring."
The real-world impact of the levy could be substantial for frequent drivers. A single journey between London and Edinburgh could cost drivers up to £12 under the new system, adding significant ongoing costs to electric vehicle ownership that previously benefited from lower running costs.
