The Government should scrap Insurance Premium Tax for electric vehicles according to a consumer website, after it emerged cover can cost up to 60 per cent more than petrol-powered equivalents.
Pure electric cars carry a hefty premium when it comes to comprehensive cover data from Honest John shows and can often cost motorists hundreds of pounds more a year.
It comes after latest industry figures revealed a three per cent drop in the number of pure electric car registrations compared to last year.
Dip: There has been a 3% drop in the number of electric car registrations since last year
Dan Powell, of Honest John, said: ‘If the Government is serious about getting more people into genuine zero-emission electric vehicles, rather than plug-in hybrids, then there needs to be decisive action.
‘And the government itself holds the key. If it removed IPT from pure electric vehicles, then premiums would instantly drop and this would improve the incentive for buyers to swap their diesel or petrol for pure electric.’
IPT is a tax on general insurance premiums that brings around £4.8billion into the treasury’s coffers each year.
Last year Chancellor Philip Hammond hiked the tax from 10 to 12 per cent, the third increase in less than two years.
The cost is often added onto bills instead of being sucked up by insurers.
There have been multiple calls to make certain groups exempt from IPT since the rise, including charities and blackbox products for young drivers.
After receiving complaints from Honest John readers, the website analysed the market to see what a typical driver can expect to pay for a comprehensive 12 month policy.
A test quote on similar models and car manufacturers from comparison website Confused found a driver aged between 30 and 55 who had no motoring convictions could expect to pay £567 for a comprehensive policy on a petrol car, £607 on a diesel and £751 on an electric vehicle.
Running the same quote for a driver aged under 25 revealed that the average annual insurance policy would cost £1,484 for a petrol car, £1,592 for a diesel and a whopping £1,854 for an electric vehicle – almost £400 more.
Another test quote found that a 35-year-old accountant living in a city with five years’ no claims can expect to pay £247 when it comes to insuring a 2015 Renault Clio petrol.
A similar fully comprehensive quote for the same firm’s electric Zoe is £395 – 60 per cent higher than the Clio, despite the fact that both are similarly priced.
Dan Powell adds: ‘Until people actually live with electric cars, there’s a perception that owning one comes with a compromise.
‘Many of these compromises have already been addressed – electric vehicles have a good range, are quickly and easily charged and are getting cheaper to buy, but the Government and insurance industries are doing the future of electromobility no favours at all, and this is something that requires immediate change.’
|Electric model||Average premium||Petrol model||Average premium|
|Nissan LEAF||£368||Nissan Micra||£253|
|Renault Zoe||£395||Renault Clio||£247|
|Volkswagen E-Golf||£388||Volkswagen Golf GTI||£387|
|Based on Go Compare average quotes. Source: www.honestjohn.co.uk|
Insurer Axa’s technical director David Williams argues that an IPT exemption may not actually increase demand for electric cars, however.
‘The question is whether the reduction would be enough to persuade more people to buy electric vehicles, and on that I’m not convinced,’ he said.
‘While the differences premium wise can be substantial, the table of premiums shows that insurance still represents a relatively small proportion of the overall cost of ownership.’
12 per cent of all motor insurance premiums now go into the government’s coffers through IPT
Williams said that the reason electric cars are more expensive to insure is in large part down to the cost of repairs compared to their petrol counterparts.
‘The battery, for instance, is a huge part of the cost of the vehicle, and it is not safe to ‘repair’ them in the way that you could a petrol engine,’ he said.
‘That said, costs are already reducing as volumes ramp up, and more repairers are able to deal with these vehicles, which increases competition and reduces costs overall.
‘We would welcome any initiative that encourages the wider adoption of electric vehicles, but we are not convinced that singling them out for IPT exemption would be the best way to accelerate this.’
Government plans may mean only new pure electric cars and hybrids with ‘significant zero emissions capability’ will be on sale in the UK from 2040.
The Road to Zero plan said it expects ‘almost all cars’ to be zero emissions by 2050.
Will your next car be electric?
How soon will you be driving an electric car? The Government laid out its Road to Zero plan this month, adding some detail to its previous announcements on how it wants to drum out petrol and diesel cars.
But is there enough in there to show how we will get from electric and hybrid cars making up a 2.2 per cent market share to 50 per cent by 2030?
From 2040, new cars running only on petrol and diesel won’t be able to be sold and a decade after that we’re all meant to go electric.
On this podcast, Simon Lambert, Lee Boyce and Georgie Frost look at what it will take to tempt us into electric cars, where they will be charged and how long their range needs to be for drivers to take them seriously.