Looking Ahead - What to watch in 2025 (and beyond)

We look back at the biggest headlines for fleets from last year – and offer a glimpse of what’s on the horizon for 2025 and beyond.

1. A clearer path to zero-emission vehicles

Delivering on a manifesto pledge, Labour quietly reinstated the 2030 phase-out date for non-hybrid new cars (but not vans) within its Autumn Statement documents^ ~~[1]^. It’s a step towards 2035, when all new cars and vans (LCVs) must be “zero emission vehicles” (ZEVs) – only battery electric and hydrogen fuel cell models will be available from that point.

In the meantime, manufacturers are facing progressively tougher annual ZEV sales targets as a share of registrations to avoid large fines. Those targets start at 22% of new cars and 10% of new vans in 2024, rising to 80% and 70% in 2030 and 100% for both in 2035. However, there is some flexibility in the early years, as manufacturers can earn transferrable credits for beating average CO2 targets for non-ZEVs ^[2].

Those credits might be valuable. Only 18.1% of new cars and 5.1% of LCVs were electric during the first ten months of 2024, according to the SMMT, which added that this was being subsidised by “billions in unsustainable discounting” ^[3, 4]^. Demand for plug-in hybrids (PHEVs), which can help reduce average non-ZEV CO2 emissions, increased by 22.5% to take an 8.4% market share.

2. Fleets are leading the charge

Despite stagnant retail demand for new cars, fleets have capitalised on a generous package of incentives and accelerated their electrification plans this year. Businesses accounted for 80% of PHEV and 83% of BEV registrations during the first half of 2024, according to the Department for Transport. A fifth (21%) of new company-owned cars were electric during that period, which is almost in line with the ZEV mandate target ^[5].

The effects are marked. Half of BVRLA members’ business contract hire (BCH) deliveries were electric during the second quarter of 2024, which in turn reduced the entire fleet’s average CO2 emissions by 20% year-on-year to 63g/km ^[6].

3. Autumn Budget was good news for EVs...

The Autumn Budget set out the tax regime for cars and vans to the end of the decade, confirming continued incentives for electric (and hydrogen fuel cell) vehicles.

Company car tax rates for ZEVs (0g/km CO2) will increase by 2% points in the 2028/29 and 2029/30 financial years, from 5% to 9% during that period ^[8]. Although that’s more than four times higher than today’s 2% rate, it’s comfortably lower than the next-lowest 18% band.
Vehicle excise duty (VED, or “road tax”) exemptions for ZEVs will end on 6 April 2025, which means all cars registered since April 2017 will attract the same £195 yearly renewals. However, the Budget confirmed ZEVs will get a low £10 first-year rate (paid at registration) until 2030 and plans to adjust the £40,000 price threshold for the Expensive Car Supplement, which adds £425 to the first five renewals.
Electric LCV incentives were less generous. The Chancellor committed £120m to extend the Plug-in Van Grant for another 12 months, providing up to 35% (or £5,000) towards the purchase cost. However, VED will still be equalised with diesel vans (at £345) from April 2025.

4. …but not for all fleets

Budget changes also spelled out some bad news for businesses with….

PHEVs will face a £100 rise in first-year VED rates and £10 for annual renewals from April 2025, followed by large company car tax rises three years later. From April 2028, vehicles emitting 50g/km or less will fall into a single 18% band irrespective of their electric range, more than tripling some drivers’ tax bills overnight.
Double-cab pickup trucks will be treated as passenger cars for corporation tax, capital allowances and company car tax if they are registered from April 2025. Benefit-in-Kind and employers’ Class 1A National Insurance Contributions will be based on CO2 emissions, instead of the flat £3,960 van benefit charge [9, 10]. For a 20% taxpayer in a Ford Ranger Wildtrak registered after those dates, monthly bills will increase from £66 to £299 [11].
Employee car ownership schemes will end in April 2026, as the government believes they’re a way to avoid paying company car tax.

5. A better charging network

The government has set a target of 300,000 public charge points by 2030, to meet growing demand from electric vehicles ^[12], and the quality of that experience is a priority too.

From November 2024, charge point operators (CPOs) must achieve 99% uptime across their network, provide manned 24/7 customer support and publish their reliability data. Contactless payment is mandatory for all 50kW or faster rapid chargers and new installations at 8kW or more, with requirements for transparent pricing and (from November 2025) compatibility with roaming services. CPOs can be fined £10,000 for not complying ^[13].

Support for home charging was also extended during 2024. Since March, households with on-street parking have been eligible for up to £350 (or 75%) towards installing a chargepoint. However, it doesn’t reserve the adjacent parking space ^[14].

6. The groundwork for driverless vehicles

The Autonomous Vehicles Act became law in May 2024, setting a legal framework for deploying driverless technology on UK roads as soon as 2026 ^[15]. This includes making insurers, software developers and vehicle manufacturers liable for any collisions, and establishing system of continuous learning similar to the aviation sector.

Although several manufacturers already offer partially automated assistance features, such as cruise control that can adjust its speed and follow lane markings, the human driver is still legally responsible for controlling the vehicle at all times.

7. Tariffs on Chinese EVs

China manufactured around 86% of the world’s lithium-ion batteries and 68% of its EVs during 2023 ^[16], and it’s undercutting most rivals just as government policy is favouring electrification. This has provoked measures to protect manufacturing jobs in other regions.

The United States introduced a 100% tariff on Chinese EVs in May [17], and Canada followed in August [18]. In Europe, the European Commission conducted an anti-subsidy investigation in October and (having set temporary duties in July) fixed rates at between 17.0% and 35.3% for five years ^[19].

However, there are no plans for the UK to introduce similar tariffs [20] and, with even tougher ZEV mandate targets in 2025, price competition for new models could heat up further next year. That should be good news for fleets.

What’s on the horizon for fleets in 2025?

Changes aren’t set to slow down any time soon. Developments worth watching include:

Rising PHEV CO2 emissions as the new Euro 6e-bis standard is phased in from January 2025. Incoming changes are designed to produce more representative efficiency data, by effectively reducing the influence of the electric range during official testing ^[21]. The ICCT claims this could double the CO2 emissions of some PHEVs, pushing them above the threshold for tax incentives ^[22].
Tougher EU CO2 targets for new cars and vans also arrive in January 2025 ^[23]. The industry target is an average 93.6g/km for cars and 153.9g/km for vans, based for the first time on figures derived from the more stringent Worldwide harmonised Light vehicles Test Procedure (WLTP) efficiency test. Manufacturers have individual targets based on their vehicles’ average weight and can earn credits if more than 25% of their cars or 17% of vans emit 50g/km or less – so expect a push for BEVs and PHEVs.
The London Congestion Charge will apply to all vehicles from 25 December 2025, which means even electric vehicle drivers will pay to enter the zone during charging hours ^[24].
Benefit-in-Kind reporting must be through payroll from 6 April 2026, replacing the annual P11d form ^[25]. Company car and salary sacrifice fleets will need to update driver records more regularly if they’re used to doing this once a year, or drivers could face backdated tax bills.
Euro VII pollutant limits come into force from October 2026 for new vehicle types, and a year later for all new cars and vans. This includes tougher particulate limits for petrol and diesel vehicles – potentially raising costs – while BEVs’ battery durability and brake dust emissions will also be assessed ^[26].

How is Ayvens supporting fleets?

The fleet landscape has never been more dynamic, and we’re here to help. We’re combining the expertise of two of the UK’s largest leasing companies to help fleets drive efficiencies, reduce operating costs and make the most of new technologies.

Our portfolio of flexible funding solutions is backed by an award-winning consultancy team, and an industry-leading digitalisation program focused on developing and deploying innovative new products and services at scale. We’re ideally placed to support your organisation with its next steps and respond quickly to changing market demands.

REFERENCES

^[1]HM Treasury (2024) Autumn Budget 2024 (Accessed: 19 November 2024)

^[2]Department for Transport (2024) Zero Emission Vehicle(ZEV) Mandate Consultation: Summary of Responses and Joint Government Response.

^[3]Society of Motor Manufacturers and Traders (2024)October 2024 New Car Registrations (Accessed: 19 November 2024)

^[4]Society of Motor Manufacturers and Traders (2024)October 2024 New LCV Registrations (Accessed: 19 November 2024)

^[5] [Department for Transport (2024) VEH1153: VehiclesRegistered for the First Time by Body Type, Fuel Type and Keepership (Privateand Company): Great Britain and United Kingdom](targetBlank: https://assets.publishing.service.gov.uk/media/66f173a234de29965b489bfa/veh1153.ods) (Accessed: 19 November 2024).

^[6]British Vehicle Rental and Leasing Association (2024) Annual Review 2024 (Accessed: 19 November 2024).

^[7] ^Ayvens (2024) Sustainable Mobility Week (Accessed: 19 November 2024).

^[8]HM Treasury (2024) Autumn Budget 2024: Overview of TaxLegislation and Rates (OOTLAR) (Accessed: 19 November 2024)

^[9]HM Treasury (2023) Van Benefit Charge and Fuel BenefitCharges for Cars and Vans from 6 April 2023. (Accessed: 19 November 2024).

^[10]HM Treasury (2023) Autumn Statement 2023. (Accessed: 19 November 2024).

^[11]Ford UK (2024) Commercial Vehicles: Brochure and PriceList. (Accessed: 19 November 2024).

^[12]Department for Transport (2024) Tenfold Expansion inChargepoints by 2030 as Government Drives EV Revolution. (Accessed: 19 November 2024).

^[13]Department for Transport (2023) Public Charge Point Regulations 2023 Guidance. (Accessed: 19 November 2024).

^[14]Department for Transport (2024) Electric VehicleChargepoint Grant for Households with On-Street Parking. (Accessed: 19 November 2024).

^[15]Department for Transport (2024) Self-Driving VehiclesSet to Be on Roads by 2026 as Automated Vehicles Act Becomes Law. (Accessed: 19 November 2024).

^[16]Zhang, B. and Nedopil, C. (2023) China Green Trade:2023 Report. Griffith University. (Accessed: 19 November 2024).

^[17] The White House (2024) Fact Sheet: President BidenTakes Action to Protect American Workers and Businesses from China’s UnfairTrade Practices. (Accessed: 19 November 2024). ^ [18]^ Department of Finance Canada (2024) CanadaImplementing Measures to Protect Canadian Workers and Key Economic Sectors fromUnfair Chinese Trade Practices. (Accessed: 19 November 2024).