Electric vehicle regulation and law in the United Kingdom

The UK shows significant potential in EV development. It is the second largest automotive manufacturing hub in Europe, with a comparatively large consumer base for road vehicles and a wealth of innovation from its world-class industry and universities.

1. What EVs have been deployed in your jurisdiction to date?

EVs currently represent a small proportion of the vehicles licensed in the UK:

 

“Ultra-low emission vehicles” (Electric, hybrid & hydrogen) 1
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/644457/veh0101.ods

Total vehicles 2
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/644467/veh0130.ods

Cars

108,000

31,212,000

Vans 

6,000

3,870,000

HGVs & buses

679

660,000

All vehicles

119,000

38,971,000

However, market share is increasing. In 2016, the UK was one of only six countries worldwide in which sales of electric PLDVs exceeded 1% of sales of all such vehicles. 3
https://www.iea.org/publications/freepublications/publication/GlobalEVOutlook2017.pdf
 August 2017 was the first month in which electric cars represented over 2% of total UK new car registrations (with hybrids contributing a further 3%) 4
EV & AFV Registrations
.

2. Is there any specific legislation for/regulation of EVs in your jurisdiction?

The UK Government announced a new Air Quality Plan in July 2017 5
UK plan for tackling roadside nitrogen dioxide concentrations
, including a commitment to ban the sale of new petrol and diesel cars and vans by 2040. The plan also included GBP 255m in additional funding for local councils to produce and implement nitrate pollution reduction plans, funded through changes in tax treatment for new diesel vehicles. Further revisions to the plan are expected following a judgment of the High Court in February 2018 6
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: the current plan has been declared unlawful on the basis that it is “not sufficient” to bring the areas suffering from the worst nitrate pollution within EU law limits.

Vehicle manufacturers have been subject to tougher “real world” emissions testing requirements since 1 September 2017. The government has also had a Motor Fuel Greenhouse Gas Emissions Reporting regime in place since 2013, requiring large-scale suppliers of road transport fuel to report to the Department for Transport on the quantity and types of fuel it supplies and the greenhouse gas intensity of each type.

A key upcoming piece of legislation is the Automated and Electric Vehicles Bill 7
Automated and Electric Vehicles Act 2018
, which was considered by a public bill committee in November 2017. The Bill introduces powers for the government to issue regulations for the improvement of the country’s charging infrastructure by e.g. ensuring interoperability between all public EV charging points, requiring large fuel retailers to provide rapid charge points and requiring that all new public charging points be smart enabled.

Scotland has indicated its intention to lead the way on electric vehicles and achieve the phase out of new petrol and diesel cars and vans by 2032, well ahead of the UK target. Proposed new legislation for 2018 outlines plans to achieve this goal by measures including fast-tracking the development of a Scotland-wide charging network, converting the A9 into Scotland’s first ‘electric highway’ and procuring ultra-low emission vehicles to update public sector car, van and bus fleets 8
Government's Programme for Scotland 2017-2018
.

3. What measures promote EVs in your jurisdiction?

The government is investing in EV promotion and infrastructure. The Department for Transport and Department for Business, Energy & Industrial Strategy have set up a dedicated Office for Low Emission Vehicles (“OLEV”), which has been given a GBP 900m investment mandate to keep the UK at the forefront of ultra-low emission vehicle technology. The government also has a range of further investment programmes in place, including a GBP 246m investment in its “Faraday Challenge” to boost expertise in battery technology; a GBP 20m investment in “vehicle to grid” infrastructure (as part of the government’s July 2017 Smart Systems and Flexibility Plan); and a recent award of GBP 40m shared among four UK cities with innovative EV infrastructure proposals (as part of the government’s “Go Ultra Low” scheme).

The government’s Clean Growth Strategy on 12 October 2017 reaffirmed all these investments, while committing a further GBP 80m to investment in charging infrastructure. Further, in the 2017 Autumn Budget, the chancellor announced measures including a GBP 200m investment (to be matched by the private sector) into a new Charging Investment Infrastructure Fund. In his October 2017 Cost of Energy Review, Professor Dieter Helm observes that EV charging infrastructure is “a textbook example of the need for government coordination” and called for a framework to be included in the government’s Industrial Strategy. The strategy white paper published in November 2017 committed to the publication of a further “strategy on government support for the transition to zero emission road transport”, expected in March 2018.

The promotion of EVs is also coming from industry sources. Ofgem, the UK National Regulatory Authority for electricity and gas, administers a GBP 500m Low Carbon Networks Fund sponsored by distribution network operators. Projects proposed by DNOs in relation to EVs have included experimentation with charging point tariffs and extensive smart metering to determine how best to reinforce distribution networks.

The current financial incentives to own a low emission vehicle in the UK include:

  • EV purchase grants – the government will pay up to GBP 4,500 towards the cost of purchasing a low emission vehicle (based on factors including CO2 emissions and distance which can be travelled with zero emissions). Taxi drivers can obtain a grant of up to GBP 7,500 for the purchase of plug-in vehicles.
  • Charging point grants – OLEV will contribute GBP 500 towards the cost of installing a home charging point (the Energy Saving Trust offers a further GBP 500); local authorities can apply to OLEV for funding for up to 75% of the cost of installing an on-street charging point in areas lacking off-street parking.
  • Various tax benefits – for example, road tax is graded by CO2 emissions. The government has also announced that, from April 2018, electricity provided by employers to their employees to charge their EVs will not be taxed as a benefit in kind.
  • HGV licensing break – the weight threshold at which an HGV licence is required is higher for electric HGVs than for vans with combustion engines.
  • London Ultra Low Emission Zone – ultra-low emission vehicles already qualify for a 100% discount on the London congestion charge; this exemption will increase in significance in 2019 when Sadiq Khan’s pledged additional fee for certain petrol and diesel vehicles is introduced. All newly licensed taxis are to be zero-emission capable from 2018.

4. Who are the main entities (e.g. developers, government, System Operator) and what are their roles in the deployment of EVs in your jurisdiction?

In addition to government, stakeholders in the UK EV market include:

  • Ofgem – the electricity regulator will have a huge role in reviewing existing licence conditions for transmission, distribution, generation and supply to ensure the removal of any existing barriers to development of EVs and their supporting infrastructure. Ofgem will also have a key role in engaging with all stakeholders.
  • Vehicle and battery manufacturers – Nissan is already manufacturing its Leaf model, and the batteries for it, in Sunderland; BMW has announced that it will be making electric Minis in Oxford; and Jaguar Land Rover has pledged to electrify its entire range from 2020.
  • Network owners and operators – National Grid, as transmission system owner and operator, will have to work closely with distribution network operators to ensure that investment in developing and reinforcing the networks is deployed in the most efficient way. This is a particularly challenging task as EVs may not be predictable in terms of the points at which they call on the networks. In February 2018, the Financial Times reported that National Grid is examining plans to install a fleet of superfast charging points for electric vehicles along Britain’s motorways that would feed directly off the electricity transmission network across 50 strategic sites. 9
    https://www.ft.com/content/82859d36-14c1-11e8-9376-4a6390addb44
  • Electricity market participants – electricity generators, suppliers and distributors will have to work together with the network owners to ensure that vehicular demand for electricity is managed; they may also have a part to play in the ownership, operation and marketability of charging infrastructure.
  • Charging station developers – existing developers of new charging infrastructure, including POD point, Chargemaster, EV Charging Solutions and Rolec, are likely to face increasing competition and a need to ensure a consistent level of compatibility and interoperability.
  • NGOs and industry bodies including Energy UK and the Energy Saving Trust.

5. What are the main challenges to further deployment of EVs in your jurisdiction? How have EV developers sought to overcome these challenges to date?

From a UK consumer perspective, a recent government survey on public attributed towards EVs 10
https://www.gov.uk/ghttps://www.gov.uk/government/statistics/public-attitudes-towards-electric-vehicles-2016overnment/statistics/public-attitudes-towards-electric-vehicles-2016
 indicates that obstacles to EV ownership include:

  • Cost – EVs remain more expensive than combustion-driven vehicles to purchase. Maintenance, charging costs, resale value and cost of insurance are also factors.
  • Freedom of travel – while a large proportion of the car-owning population is able to charge their cars at home every night, the shortage of nationwide charging infrastructure is a major issue for prospective EV-purchasers. The ratio of public charging points to registered EVs is currently 1:2,900 in the UK as compared with 1:350 in Norway. The Automated and Electric Vehicles Bill may go some way towards addressing this issue – although the introduction of vehicle-to-grid discharging measures could cause consumers concern if it leads to their being unable to control their vehicles’ charge levels. If National Grid’s plans for a fleet of superfast charging points is delivered, 90% of drivers heading in any direction from anywhere in the UK would be within 50 miles of an ultra-rapid charger.
  • Recharging – convenience is a concern. Lack of charging points in the immediate area, lack of knowledge of location of charging parts and time taken to recharge are all factors here. Only 5% of those surveyed said they were thinking about buying an EV.

One of the most significant challenges will be encouraging the various stakeholders listed in section 4 above to cooperate to take ownership of the necessary infrastructure and manage electricity demand. There are a number of plausible models for this, from bespoke power purchase arrangements to taking consumers entirely “off grid”.

Current regulation is also a challenge – e.g. weight-based vehicle licensing requirements discourage purchase of electric vans. Ofgem has often been overtaken by the pace of change, and there will need to be a level of flexibility and pragmatism in bringing forward changes to the licensing regime and to industry codes to open the doors to new participants in the energy sector.

Despite significant advances in battery technology in recent years, this component remains a significant limiting factor for vehicle manufacturers, especially in relation to heavy goods vehicles. Further, while it might be assumed that developments in autonomous and connected vehicles will naturally accompany the transition to EVs, they in fact present their own difficulties. Self-driving vehicles process a very large quantity of data, and consume a lot of power in the process; fully electrifying these vehicles will require further developments in battery technology to be economically viable.

The National Infrastructure Commission, in its October 2017 draft National Infrastructure Assessment, observes an additional issue for government. The transition to EVs will require a new model for taxing road use (to fund road maintenance), since fuel duty will become inapplicable and EVs benefit from vehicle excise duty exemptions.

These challenges present a broad range of opportunities for businesses across the electricity market. While the transition from petrol/diesel to EVs will inevitably have a significant impact on electricity demand, National Grid has published reassurance that the media is prone to overstate this. National Grid anticipates that increase in peak power demand is most likely to be between 6GW and 18GW by 2050, with the exact increase depending heavily on electricity market development as well as consumer behaviour. System stress can be minimised by the effective roll-out of smart charging infrastructure and the complementary development of smart energy networks to smooth out the impact of the additional demand. Grid strain could be avoided entirely if charging point owners and EV drivers invest in their own generation and storage facilities.

Portrait ofLouise Dalton
Louise Dalton
Partner
London