Alphabet calls on Government to raise Expensive Car Supplement threshold to £60,000

5 February 2025, Farnborough, UK: Alphabet, the leading provider of business mobility and fleet management services, believes the current Expensive Car Supplement (ECS) threshold could hinder the uptake of electric vehicles (EVs) in the UK.

Caroline Sandall-Mansergh, Consultancy and Channel Development Manager at Alphabet (GB), believes that while the Government is right to extend to ECS to include EVs from 1 April 2025, the existing threshold could slow down the UK’s move to electric over the next few years.

She is calling on the Government to raise the level of the ECS, commenting: “I don’t believe the current threshold of £40,000 is at the right level. Based on a review of Alphabet (GB)’s data relating to 3,508 quotable vehicle models[1], our view is that it should be raised to £60,000.” 

She urged ministers to then review the level annually based on P11D values of the nationwide vehicle parc, adding: “Our data reveals that the average P11D value of quotable petrol, diesel, hybrid and EV models reviewed is £51,855 – just over 25% more than the current ECS threshold. However, if you look at 961 of quotable EV models, the average list price is £60,273. And for 81% of quotable EVs that are listed over £40,000, the average P11D equates to £66,041 which shows just how much the threshold needs to shift to be truly reflective of the market.”

Analysis by Alphabet reveals the range of EVs accessible to consumers for under £40,000 is severely restricted. Caroline believes raising the ECS threshold from £40,000 to £60,000 should only be a temporary measure, with annual reviews gradually lowering it as more affordable EVs become available.

So, now is the time to act. End-users are already making decisions about their future car choices based on the current levy, which is precluding many drivers from making the switch to an EV. Caroline is calling on the Government to implement change ahead of the Spring Statement in March 2025, and certainly before 1 April, saying it would be welcomed by the fleet and leasing industry and further assist the Government's green mandate. 

Caroline added: “Any delay to moving the ECS threshold is likely to increase drivers' hesitancy and potential reticence from making the switch to EV, because including EVs from 1 April will mean increased cost of ownership. There is a genuine concern that drivers will decide to stick with what they know, rather than look favourably at an EV, based on the numbers available to them now.”

She believes this stance is perpetuated by misinformation and negative mainstream media coverage, which does not show the context of owning an EV and the potential longer-term savings.

Turning to the industry, Caroline recognises that removing the ECS exemption for EVs is going to have an impact on take-up of EVs. She commented: “We know business users are largely driving EV adoption. Therefore, operators with large fleets of EVs, which have previously been exempt, are now going to be carefully evaluating fleet composition and budget forecasts.

“It's also a really difficult time because a lot of the EV residual values have gone down,” she added, “so, it’s a ‘double hit’ with RVs worsening and the ECS exemption being removed. This will put a lot of EVs dramatically outside of grade.”

Her advice to fleet operators wondering what to do is simple – make sure you're getting your numbers right.

Caroline explained: “Many operators don't take into consideration every element within whole life cost. For example, they don’t use an accurate ‘fuel vs energy’ comparison when comparing EVs and ICE vehicles. If the average contract is for 20,000 miles a year, the operator may not be able to distinguish between business and personal usage, meaning the difference could be huge. Calculations are further complicated because some end-users charge privately at home while others use public infrastructure, which would have significant cost-implications.”

Caroline concluded: “Operators should be reviewing the way they construct their car choice list to try to make it as reflective as possible of actual cost. They need to ensure they’re taking a detailed and sophisticated enough view of every element to get accurate results. We know they can’t build a car list based on, for example, 25 different averages, but they must have something structured – and now more than ever it needs to be accurate.”

[1] Based on Alphabet data from December 2024