By Staff Reports
(DGIwire) – With the goal of going green and improving air quality, the UK government announced a total ban on the sale of new gas and diesel vehicles beginning in 2040. Good for the environment? Yes. But will there be roadblocks along the way? Yes again. In fact, there will be one distinct tax challenge to overcome, notes Stephen Voller, contributor to TransportXtra and CEO of ZapGo Ltd, the developer of Carbon-Ion™ (C-Ion®) cells, a fast-charging and safe alternative to lithium-ion batteries.
“Tax is the big elephant in the room,” Voller says. “In the UK, for example, the tax on fuel is effectively around 70 percent, according to the Department for Business, Energy & Industrial Strategy; this includes both fuel duty and value added tax (VAT) but the tax on electricity is only five percent, according to Energy UK. If all the vehicles switch to electric, this revenue would fall to a fraction.”
According to UK Petrol Retailers Association (PRA), the UK government collects about £34 billion ($40 billion) a year in taxes from approximately 8,500 filling stations across the country. This tax money is used for road infrastructure. New infrastructure will still be needed for hybrid and electric vehicles (EVs) in order to ensure that the energy is widely available in places like filling stations because in the UK only one in five drivers lives in a house with a garage, according to a study conducted by RAC Home Insurance. In central London, nine out of 10 drivers live in apartments or park on the street. So how do governments maintain tax revenue to pay for this important infrastructure, but without pushing the price of electricity through the roof by taxing it at the rates of fuel?
One solution could come from installing new technology at filling stations that allows buffering of the electrical grid. The buffered energy can be stored off-peak or at night when electricity is less expensive. EVs can then be recharged from this stored energy, not directly from the grid. Governments have the potential to regulate the EV rechargers at the filling stations to apply a reasonable level of tax over and above the five percent. This will allow some continued funding of road infrastructure. Drivers may wind up paying a little bit more for the electricity for the convenience of a five-minute recharge, but they will still drive on roads in a good state of repair.
“The rate might work on a sliding scale—perhaps 20 percent during commuting hours, dropping down to 10 percent during off-peak hours—and the rate might also rise as EV use increases,” Voller says. “Although a 10 to 20 percent rate might seem modest, I believe the full tax revenue would be recovered by around 2040 because by then, the total number of EVs on the road would have increased in line with population growth and the widespread use of autonomous vehicles.”
Helping to make this scenario feasible is that the next generation of EVs, such as Porsche Mission E, will support Extreme Fast Charging (XFC). This allows charging stations to operate at megawatt rates of charge, according to TransportXtra—10 times faster than the current Tesla superchargers. At these rates, recharging an EV for a 300-mile range is possible in just five minutes. ZapGo’s C-Ion technology is capable of replacing an EV’s lithium batteries to allow XFC and it also has the ability to be integrated into the recharging stations that make buffering possible.
“With an EV future clearly approaching in a range of nations around the globe, overcoming the current tax issues is a must,” Voller adds. “It will likely be impractical for everyone to charge an EV at home and XFC can play a crucial role in ensuring cleaner air in our big cities.”