Jeremy Hunt’s new ‘Tesla tax’ to add hundreds of pounds to electric vehicle running costs

The Tesla Lucid Air (Tesla)

Jeremy Hunt has introduced a “Tesla Tax” on new electric cars, adding hundreds of pounds to the running cost of the eco-friendly vehicles and sparking concerns that road users could be put off buying an EV.

In his Autumn Statement, the chancellor removed the exemption for EVs from the £335 “premium supplement” on new cars. That means that any person buying an EV worth £40,000 or more could have to pay a whopping £520 for road tax, despite being the greenest option

Hunt told the House of Commons: “Because the OBR forecasts half of all new vehicles will be electric by 2025, to make our motoring tax system fairer I have decided that from April 2025 electric vehicles will no longer be exempt from Vehicle Excise Duty.”

The move, which is set to be implemented in April 2025, has sparked frustration among EV drivers facing higher costs, and has raised fears that drivers looking to switch to environmentally friendly vehicles will be put off the move.

Founder of ChooseMyCar.com, Nick Zapolski, said “This new “Tesla tax” means that some people will now be paying more for their road tax than someone in an old banger, which is not in line with the Government’s green credentials.

“It’s undeniable that the high purchase price of new EVs – and the lack of second hand ones on the market – mean it’s out of reach for many drivers. Any new tax on them will just exacerbate this situation – and could be seen as an indication that other benefits of EV ownership are under threat.

However, RAC head of policy Nicholas Lyes said: “After many years of paying no car tax at all, it’s probably fair the Government gets owners of electric vehicles to start contributing to the upkeep of major roads from 2025

“We don’t expect this tax change to have much of an effect on dampening the demand for electric vehicles given the many other cost benefits of running one.”