Halfords boss warns move to tax electric motors could hold back switch from fuel

The boss of retailer Halfords has hit out at the Chancellor’s move to start taxing electric cars, warning it will hold back the switch from petrol and diesel motors.

Chief executive Graham Stapleton told the PA news agency Jeremy Hunt’s autumn budget announcement that electric vehicles (EVs) would no longer be exempt from road tax from 2025 was “disappointing”.

Under the plans laid out in the autumn statement, electric cars registered from April 2025 will pay the lowest rate of £10 in the first year, then move to the standard rate, which is currently £165.

Mr Stapleton said it could impact the mass adoption of EVs, making them both costly to buy and now more costly to run.

He said: “There’s no doubt the duty change on electric vehicles is not helpful.

“It won’t help the adoption of EVs for sure – we were surprised to see that (in the autumn statement).

“EV cars aren’t getting any cheaper quickly and increasing duty at this stage is disappointing.”

Since EVs came onto the market, these models have been exempt from annual road tax as the Government has sought to incentivise take-up of electric cars.

But with an increasing number of drivers choosing EVs – 14.6% of all new cars registered in 2022 up until the end of October were electric – the Government is under increasing pressure to help fill the financial gap left by their road tax exemption.

Mr Hunt said on making the announcement that it would “make our motoring tax system fairer” as the Office for Budget Responsibility (OBR) has forecast that half of all new vehicles will be electric by 2025.

The Treasury revealed the changes would raise an extra £1.6 billion by 2027-28.

Mr Stapleton also raised worries over the revelation that fuel duty could increase by nearly a quarter in 2023 under Government plans, which comes at a time of already mounting cost pressures on drivers.

The OBR revealed in its forecasts published alongside the Budget that it is expecting fuel duty to rise by 23% in the spring, increasing the price of petrol and diesel by around 12p per litre.

Mr Stapleton said motorists are facing a “real challenge” amid the cost-of-living crisis.

He added that the pandemic has not meant fewer cars on the road.

“There’s the same number of cars on the road as there was pre-Covid – maybe there’s less miles being driven, but the same number of cars, so people are still having to travel.”

Halfords revealed in its recent half-year results last week that nearly one million cost-conscious drivers have signed up to its motoring loyalty club since it launched in March as they look to make savings wherever possible on car servicing and MOTs.

The group said that it was seeing under-pressure customers cut back on non-essential spending and so-called “big-ticket” items, such as driving technology and bikes.

It saw underlying pre-tax profits halve to £29 million for the six months to September 30, down from £57.9 million a year ago and warned the full-year result will be at the bottom end of its expectations.