UK road tax and the £40k limit

UK road tax and the £40k limit

The UK car tax regulations are changing for electric cars with a list price of £40k or above, this adds an annual roadtax rate of £310.

Probably not a big concern for potential S/X owners, however the 3 is a big ask for me.

This leaves (potentially) a very small amount of room for extras before hitting the £40k threshold. It might be more cost effective to add some extras on afterwards and it will affect resale!

Has anyone else seen this, will it change your config? Do you think Tesla will adapt in any way to this?

s2rogerjackson | 8 February 2017

Hope so Are you sure about road tax

s2rogerjackson | 8 February 2017

Hope so Are you sure about road tax

GoreLimey | 8 February 2017

It's listed on gov website on changes to road tax from April17. I can't link it I'm afraid.

£310 a year from years 2-6, free in year 1 and year 7+

holophoenix70 | 8 February 2017

But when is a £40k EV A £40k EV? Before or after the £4,500 government grant?

GoreLimey | 8 February 2017

It says list price before discounts :(

jdanielp_uk | 8 February 2017

Hmm, that's not very promising although my maximum budget was looking like maxing out at around £40k anyway.

Let's hope that Tesla UK manages to keep the base price as low as possible over here (previously suggested to be below £30k which seems increasingly unlikely) else they may suddenly find themselves losing a lot of reservations.

mark | 8 February 2017

As mentioned above, I think a lot of it depends on whether the £4500 grant is included or not. After all, this is a grant, not a discount from the manufacturer.

I would like to keep mine below £40k, so, a) I can afford it! and b) it avoids the road tax.

I don't want a basic car though, and want to option it up to at least the level of my current car.

Even if it was £35k, taking off the grant would give you £31.5k, so room for £9,5k of options to keep it under £40k which should be fine. If the grant is not included, then only £5k worth of options which may mean having to choose between options, or taking the tax hit.

I will try to get clarification if the £40k includes the grant or not.

jaisee | 9 February 2017

Actually I'm surprised the 40k tax surcharge effective April has not been discussed here till now. We have been lamenting about it over at tmc and m3oc since Model 3 reveal last year.

I think Tesla UK have to be more imaginative going forward - for example, it should be possible to offer Teslas with battery on lease terms. The battery comes with an 8 year, unlimited mileage warranty anyway so ideal conditions IMO for it to be a leased out component.

At the end of the day this is going to affect Tesla more than others. Someone considering a 65k porsche won't bother about the surcharge. But those who might look at getting a Model S 60 might - it's just the way each demography works. Essentially, this is going to be a Tesla Tax so it is in the interest of Tesla UK to be creative selling here.

GoreLimey | 9 February 2017

Let's say the base car is 50kwh and a software unlock for 60kwh, could Tesla offer pre delivery upgrades after the "final" price?

The S suffers an extra surcharge for post delivery upgrades. If a post delivery upgarde is under £1500 it'll be more cost effective to upgrade later!

Red Sage ca us | 9 February 2017

jaisee: The battery lease notion is an absolute non-starter. No one buys a BMW 320i and leases the 15.9 gallon fuel tank seperately. Tesla is in the business of new car sales. They need not offer a parallel business of battery leasing at all. An electric vehicle is not complete without its battery.

jdanielp_uk | 9 February 2017

@Red have any electric cars in the US been offered with the option of a battery lease? Whilst I would tend to prefer to avoid that myself, it is something that some companies have made use of in the UK and it must make the initial cost of an electric car that much more manageable for many... If Tesla decide that they are likely to end up missing out on sales in the UK because of the backwards changes to car tax imposed by the Government, I wouldn't be all that surprised to see them adapting in some way. Of course, as GoreLimey suggests, it seems plausible that they may employ some 'creativity' with list prices by letting buyers pre-order post-delivery options at pre-delivery prices.

Red Sage ca us | 9 February 2017

jdanielp_uk: I think that one of the now defunct electric car companies, maybe associated with A123, had considered the option of battery leasing. But whomever it was never actually did so and no real product ever saw wide release.

I am aware of 'A Better Place' and how they worked with Renault/Nissan in Europe. I am also aware that in the UK there is an electric car company that sells no cars, they only lease them to users.

Creative means of supplying EVs have come and gone. Some may have been before their time, while others were proven entirely impractical.

I expect that 'The FUTURE' of transportation will be some mix of private ownership, public transportation, and ride sharing services.

bj | 9 February 2017

Hmm... while £310 per year is probably an unwelcome impost, I wouldn't make a buy / not buy decision purely because of that. What about the savings you'll make in maintenance and fuel with a BEV? That alone probably compensates for it!

In Australia we have this thing called a "luxury car tax" which applies to every vehicle above a certain price, EV or not. But at least it applies only to the amount OVER the price threshold, so it gradually increases from $0 as the car gets more expensive over the threshold.

It's not like it's a fixed tax and below price "X" you don't pay it and above "X" you pay it in full - that sort of hard limit is really bad economically because it's a massive incentive for businesses and consumers alike to distort and contrive so that you come in below price "X".

Both Model S and Model X are caught in the LCT net here, but base Model 3 will not (a loaded Model 3 with USD price over about $47.5k would start to trigger it).

jdanielp_uk | 11 February 2017

@bj you're right that the £310 road tax it isn't much in the grand scheme of things, but as seems to be the case with GoreLimey and, most likely, a fair number of other reservation holders, including myself, a Model 3 with just a few options will be quite a stretch even when factoring in the Government Plug-in Car Grant (assuming it is still in place when we are able to order) given that prices are likely to be rather higher than originally anticipated due to our economic nosedive. Having any additional costs won't help matters, even if they aren't all required up front. Fair point about making savings on maintenance and fuel although that doesn't apply to me because I don't own a car at the moment, but I can factor in some public transport savings at least. The most frustrating thing about it in many ways is the principle of taxing any zero emissions cars given that we need to be making them desirable.

bj | 11 February 2017

@janielp_uk - I'm actually torn over the concept of EV incentives. At one level I absolutely agree that the world needs to transition completely away from fossil fuel use, and fast. In circumstances like that, there is a credible argument that government needs to intervene to accelerate that process if the market is not doing it fast enough.

But then I reflect on my socialist tendencies and think (given that Australia has a Luxury Car Tax) would it be fair that I get a discount from the government for buying a mid-luxury car purely because it's zero emission, when I earn a lot of money and frankly I should be paying my fair share of tax if not more.

I think the answer is any incentives should be means tested. I shouldn't get any incentives, but someone on average earnings or lower should. And have a sliding scale - the less you earn, the bigger the incentive. That stimulates adoption in the right way. We need the masses taking up EVs, not just the top 1% or 10%.

hmallett | 16 February 2017

Will the Model 3 be under £40k at all? Given the large Model S UK price increases due to the weakness of the £, I'm not counting on it! Who knows what will happen to the £/$ rate when article 50 is triggered?

Will it change my config? I've got a deposit in only to give me options at the moment. Still not a definite order from me. Do I think Tesla will adapt to this? No.

jdanielp_uk | 16 February 2017

@hmallett well if it becomes that expensive then at least it will be easy for me to make a decision and not buy one.

bj | 16 February 2017

@hmallett - In Sep last year I scattergraphed the GBP vs USD list prices for all Tesla vehicles and came up with a very good formula for the retail price of a Tesla vehicle in GBP = 0.8927 USD - 4375.

The formula would have changed since, due to falling GBP, but the formula above predicts a USD 35k base Model 3 would retail at £26,870. To get it over £40k the USD price would need to be $49,700, i.e. quite a lot of options added.

hmallett | 17 February 2017

@bj - yes, I saw your post at the time. Love a bit of stats!
Your correlation formula has -£4375. Is that representing the government grant for electric vehicles? I.e. was your formula taking the UK pre-grant or post-grant price? If it includes the grant, then we need to add that back on to get the base price.
From memory, the price of the entry Model S has gone from £55100 to £62000, which is a 12.5% increase. I don't know if the dollar price has increased over the same period.
So with my pessimistic mind, I can see the UK price creeping up and up...

cars | 17 February 2017
bj | 17 February 2017

@hmallett - no, the -£4375 has nothing to do with the grant. It is purely a mathematical outcome of the correlation. Yes it implies that a USD 0 car would be -£4375 which is clearly nonsense, but the underlying cause of that offset is likely to be either some variable tax rate in the UK that applies to vehicles, or some variable involved when Tesla determines its GBP prices.

If the GBP prices have gone up more than 10% then I should do the scattergram again. Maybe after the final reveal, unless pricing is announced in which case my musings are redundant.

theukprof | 22 February 2017

If I can't get the 3 with decent spec for well under 40k then I will have to rule it out for me.

theukprof | 22 February 2017

If I can't get the 3 with decent spec for well under 40k then I will have to rule it out for me.