2025 set to be costly for EV owners with loss of key incentives

Drivers of electric cars should be braced for higher ownership costs as several key incentives that have fuelled the rise in EV ownership are slated to expire next year.

According to new research by Close Brothers Motor Finance, the impending changes could dampen enthusiasm for EVs, particularly among those who purchased their vehicles to save on costs.

The research, which surveyed 500 EV drivers, revealed that 54% of respondents had chosen an EV primarily to reduce running costs.

However, many of these savings are now under threat. Currently, EV owners enjoy exemptions from Vehicle Excise Duty (VED), commonly known as road tax, and the Expensive Car Supplement - a tax applied to cars priced over £40,000.

Both of these exemptions are set to end in 2025, unless the new government decides to intervene.

Surprisingly, 42% of those surveyed were unaware of the upcoming changes, with significant portions of this group indicating they might not have purchased an EV had they known.

Specifically, one-third of drivers were unaware of the VED changes, and of those, 33% said they would have reconsidered their purchase.

Additionally, nearly a quarter (23%) were unaware of the Expensive Car Supplement changes, with 27% stating they might not have opted for an EV had they been informed.

Lisa Watson, director of sales at Close Brothers Motor Finance highlighted that the looming end of incentives could deter future EV adoption, particularly in the face of the ongoing cost-of-living crisis and the already high prices of new EVs.

“Drivers and motor dealers will be keeping a close eye on the policies of the new government following the general election, in the hope that incentives are reintroduced to encourage wider EV adoption. Until then, dealers will be closely monitoring fluctuating consumer demand to ensure their forecourts are stocked appropriately.” 

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