The UK Chancellor’s latest Autumn Budget introduces a complex set of measures that, rather than alleviating uncertainty in the automotive market, may worsen it for both consumers and manufacturers. The combination of deferred tax increases and new investment plans creates a murky financial landscape that is likely to discourage new car purchases.
The Uncertainty of Future Road Pricing
One of the most significant concerns for drivers is the proposed “eVED” – a pay-per-mile tax on electric vehicles (EVs) and plug-in hybrids set to be implemented in 2028.
This plan raises practical questions: How will mileage be tracked, especially on cars not subject to mandatory vehicle inspections? Will drivers be charged for miles driven outside the UK? The lack of clear answers fuels further anxiety, and headlines highlighting the rising cost of EVs are already circulating.
Short-Term Relief, Long-Term Concerns
The continuation of the 5p fuel duty cut provides temporary relief, but it is slated to end in September 2026, at which point fuel prices will rise again. This could nudge buyers toward more fuel-efficient vehicles, and the extended Electric Car Grant, if maintained through 2030, may further incentivize EV adoption.
However, the impending ban on new petrol and diesel car sales complicates matters. The exact fate of hybrid models remains unclear, potentially making plug-in hybrids disproportionately affected by the pay-per-mile tax, which will add to their already high running costs.
Mixed Signals on Affordability
Raising the threshold for the Expensive Car Supplement on Vehicle Excise Duty (VED) to £50,000 will make some EVs more affordable, potentially boosting uptake. Revenue generated from the pay-per-mile tax is also earmarked for road maintenance, a positive development.
However, the Budget fails to address the high cost of public EV charging. A VAT reduction to match domestic electricity rates (currently 5% versus 20% for public chargers) would make EVs more appealing to those without home charging access, particularly in urban areas where air quality benefits are most needed.
The Cost Comparison: EVs vs. Petrol Cars
The pay-per-mile tax will likely exacerbate the financial disadvantages of relying on public chargers. For example, a VW Golf costs around 12p per mile to fuel, while an ID.3 EV charged at home on the current Ofgem price cap costs 6p. But if the ID.3 is charged at a typical 53p slow public charger, it becomes 12p per mile – and the 3p per mile eVED tax makes it more expensive to fuel than the Golf. At rapid charging rates (76p per kWh), the cost gap widens further.
The Chancellor’s budget delivers more financial calculations and doubts, rather than clear incentives for EV adoption. In a market already grappling with uncertainty, this approach is unlikely to inspire confidence among car buyers.
