Norway leads the world in the adoption of eco-friendly vehicles. Richard Lowden, chairman of international lower-emissions car hire company Green Motion explains why and how the UK can learn from Norway's success.

We may congratulate ourselves on advances in green technology, but the UK's speed in putting eco-friendly vehicles on the road lags many of our European neighbours. Maybe it's because environmentally-friendly and cost-effective aren't phrases that always go hand in hand?

Whatever the perception, the fact is plug-in vehicles accounted for almost 2% of new UK car sales in 2017 compared to around 30% in Norway (with a further increase of up to 40% predicted in 2018). But don't be fooled into thinking the Norwegians are a nation of eco-warriors. This shift in car-buying habits is mainly due to attractive financial incentives that make a difference to the pockets of both individuals and businesses.

Why is Norway giving the green light to eco-friendly cars?

The fact that car batteries are currently expensive to manufacture means that new electric cars will remain more costly than their petrol or diesel counterparts until at least 2022. This puts many businesses off plug-in vehicles, because the higher initial outlay is a barrier to taking advantage of the savings that can be recouped through the lower running costs of electricity, compared to petrol or diesel.

The progressive green taxation policy in Norway, eliminates this issue by scrapping costly import taxes on plug-in cars, meaning the upfront cost of buying an electric vehicle is significantly reduced. Not only that, owners of electric cars are also exempt from VAT. There is also an exemption from road tolls, emissions charges and ferry fares, plus the opportunity to make use of free parking and bus lanes.  

What's the situation in the UK?

Government grants of £2500 or £4000 are available for an approved list of ultra low emission vehicles (ULEVS), in addition to other perks, such as exemption from the London Congestion Charge and a VAT rate of 5% on electricity, compared to 20% on petrol or diesel. And although UK government policies are not as generous as those in effect in Norway, UK business owners can still benefit from switching to low emission vehicles for the following reasons:

  • Tax benefits

Business owners of ULEVs, which are defined as cars or vans which emit less than 75g of carbon dioxide (CO2), are eligible for a range of financial benefits relating to taxation of company cars (CCT), car and van fuel benefit charge, advisory fuel rates and enhanced capital allowances. Employees who opt for an electric or hybrid vehicle in a salary sacrifice scheme, are entitled to income tax and national insurance advantages when they receive a ULEV vehicle as a benefit in kind.

  • Improved infrastructure

The network of charging points across the UK's roads is improving all the time. Charging connectors have increased from 11,000 in February 2017 to 15,273 in early March 2018, with 436 connectors added to 5,338 charging locations in the 30 days to March 6th alone. At this rate of expansion, it's clear that electric charging locations are on track to catch up with the UK's approximate 8 500 petrol stations. So, when it comes to getting staff or products from A to B, a lack of charging locations is no longer an issue.

  • Low cost mileage

Petrol and diesel can be a huge expense for businesses, so despite the higher initial cost of buying a ULEV vehicle, the savings made by running on electricity are a big bonus. Not only is VAT on electricity charged at 5% as opposed to the 20% for petrol or diesel, you can expect a saving of up to £100 per 1000 miles, an amount that rapidly adds up if you have fleet of vehicles on the road. Also, some businesses have invested in electric car pools to cut costs as well as reduce emissions.

  • Good PR

While in itself positive, PR is not a reason to switch to a low-emissions fleet, proving your credentials as an innovative, eco-conscious organisation is a fantastic good news story for your business. Not only will it mark you out as a forward-thinking early adopter of new technology, it will get you noticed by current and potential clients for all the right reasons.

  • Greater choice

As electric and hybrid vehicles move into the mainstream, businesses are less likely to be put off by the lack of choice that has been an issue in the past. Whether you are looking for a cost-effective small car, a luxury executive vehicle or a spacious hybrid van, there is plenty of choice available in the current market, with new models being launched all the time by household names such as Jaguar, Ford and KIA.

The Brexit effect

The uncertainty surrounding Brexit is an issue in many aspects of business. However, in my opinion, in this area at least, Brexit should be used as an opportunity for us to push the sales of electric vehicles up. As a country we should be planning to use our new status to take inspiration from the eco-friendly taxation policies of our fellow non-EU country, Norway to improve on our commitment to reducing emissions.

Anticipating the future

The fact that the planet will run out of fossil fuel is indisputable, so rather than delaying the inevitable, surely it makes sense for businesses to get on board with the switch to electric vehicles sooner rather than later? While it's true that the UK government could be doing a lot more to emulate the success story in Norway by providing better financial incentives, the global success of Green Motion International proves that when it comes to the lower-emissions car industry entering the business mainstream, the future is already here.

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