Electric avenue: Increasing access to electric vehicles among low-income households

KEY POINTS

• Transport poverty affects over five million individuals across the UK, who are pushed into poverty as a result of transport costs.
• As electric vehicle (EV) drivers have lower running costs than internal combustion engine (ICE) vehicle drivers, the transition to EVs could pull 940,000 people out of poverty in England, and an additional 136,000 in the rest of the UK.
• But because EVs have higher upfront costs than ICE vehicles, low-income households would make a net loss over the first five years after buying an EV, even despite operational savings.
• Existing policies to promote EV uptake in the UK have been ineffective or poorly targeted:
  • The UK’s Zero Emissions Vehicles Mandate demands car manufacturers increase the proportion of their sales made up by EVs, but this is reliant on EV demand, which has slowed over the past year.
  • Previous UK subsidies have been inefficient, spending over £15,000 for every additional EV, with much of this money going to drivers who would have bought an EV without the subsidy.

RECOMMENDATIONS

• Social leasing – as developed by France – offers a more efficient alternative. This enables poorer households to lease a car for a low monthly fee from a private leasing company, with the government paying the difference between this fee and the market price.
  • A UK scheme providing social leasing for 10,000 EVs would initially cost £175 million per year, rising to £520 million if continued.
  • Policymakers should prioritise households with less than £8,000 per person annually, rising to £18,000 depending on demand.
  • Geographic eligibility should be limited to those households with high driving needs, such as those who live more than three miles from their workplace.
  • This could pull over 500,000 people out of poverty while taking between 900,000 and 1.5 million tonnes of carbon out of the atmosphere every year.