Making the 2035 deadline achievable

The Government’s decision to bring forward the ban on selling new petrol, diesel and hybrid cars from 2040 to 2035 will require the concerted efforts of politicians, regulators, manufacturers, lenders, utilities and planners to make it achievable.

In fact, the Government should be gathering us all around a table to sort out a credible delivery plan.  

The discussion could usefully start by addressing demand. Combatting range anxiety is an understandable barrier to the uptake of low emission vehicles (LEVs). After all, why would anyone expect people to spend money on a car that they suspect might leave them stranded on the side of the road. Building demand depends on the creation of a charging network that every driver in the UK can trust to be close, available and reliable.

With motor finance currently used in 91% of private new car purchases, the FLA is right at the centre of any debate about increasing the uptake of LEVs. We also have expertise to offer on the use of asset finance (leasing and hire purchase) by businesses to help fund a truly comprehensive charging network.

So, our recommendations for making 2035 an achievable target?

Update the Consumer Credit Act (CCA) because, in its current form, it can make buying an LEV a cumbersome process for customers as the CCA is not compatible with the features of the emerging LEV market – for example, where vehicles are comprised of more than one asset with perhaps differing rates of depreciation, and where often more than one user is involved with the vehicle.

The market for LEVs is relatively new and still evolving, so the available depreciation data isn’t comprehensive, and the assets may not depreciate in a predictable way – for instance developments in next generation batteries may undermine the value of their predecessors. Therefore, a risk sharing scheme developed between the Government and British Business Bank, along the same lines as the asset finance variant of the Enterprise Finance Guarantee, would go some way to encourage investment, and keep the cost of finance manageable for consumers. 

Asset finance lenders are already working with local authorities in different areas to help fund the roll out of commercial and private hire LEVs, and to expand the infrastructure for charging networks. But this kind of enterprise is patchy and needs to be coordinated to ensure that uptake of LEVs and expansion of the charging network is happening in every local authority.

Published 06 Feb 2020