When the plug-in Toyota Prius Hybrid arrived in 2012, its combination of rechargeable battery pack and gasoline engine was hailed as the best of both worlds.
Plug-in hybrid (PHEV) owners can now plug their cars into a three-pin plug and get longer electric driving ranges without having to recharge the electric motors themselves through regenerative braking like earlier hybrid models, while also being backed up by a gasoline engine. It saves you money, reduces range anxiety and is good for the environment.
But plug-in hybrids are about to become the least popular cars in America. From 2028, those who buy plug-in hybrids because of their green credentials will be among the most heavily taxed motorists.
They will be charged an “illogical” fee of 1.5p per mile as part of the government’s new road pricing scheme. In addition to mileage fees, they will continue to pay fuel taxes at the pump, effectively paying the tax twice for every mile driven.
Electric vehicles (EVs) will be charged a higher rate of 3p per mile, but as drivers pay no fuel tax the pay-per-mile principle is already tacitly accepted. Meanwhile, unplugged, self-charging hybrid cars are not affected by the new per-mile charges and will continue to pay normal fuel taxes.
Car dealers believe owners fed up with PHEVs will be eager to sell as demand will inevitably fall before pay-per-mile launches in 2028.
Second’
‘
Geoffrey Troughton, who owns a Ford Kuga PHEV, said: “Who wants to buy a plug-in hybrid when you can avoid the tax with another car?” he asked. “Just because my car has a plug, I get charged, and a self-charging hybrid doesn’t. It’s an illogical and ridiculous tax.”
Speaking in the House of Commons, Transport Secretary Heidi Alexander said: “Equity remains at the heart of this Budget and as the Chancellor rightly said, ‘everyone has to contribute’, so electric and plug-in hybrid vehicles will start paying the new Electric Vehicle Excise Duty (VED).”
What she fails to highlight, however, is the contribution hybrid drivers are already making.
They pay a fuel tax of 52.95p per liter every time they fill up at a petrol station, which works out to around 6p to 7p per mile. Add in VAT – which is calculated on the cost of fuel (20%) and charging charges (20% for public charging, 5% for households) – which easily equates to a triple tax.
Plug-in hybrids often have limited range on their battery packs, so drivers often overlook the car’s electric capabilities. The average range of PHEV electric components is 15 to 60 miles. That pales in comparison to the capabilities of pure electric vehicles, which can travel more than 300 miles on a single charge, according to testing by consumer group Which?
The poor battery range of plug-in hybrids means many owners are reluctant to charge their cars or use electric features. However, they still pay 1.5p per mile traveled.
David Sillito, who lives in central Scotland and drives a plug-in hybrid Lexus, said: “If I drove to Manchester, came back one weekend, then went to Newcastle and came back the next weekend to see my kids, I would have done just under 1,000 miles. But about 900 of those miles would have been on the road.” [fuel] engine, so I’m paying 1.5 miles for 900 miles and I’ve paid the gas tax.
“I find this absolutely ridiculous and unfair.”
The government doesn’t differentiate between the range of a hybrid car’s battery or engine: if you own a PHEV, you’ll have to pay 1.5p per mile regardless.
The government said that while it “recognises that plug-in hybrid driving habits vary and that some drivers drive more or less than 50% of the time in electric mode”, it would be impractical to ask drivers to report their gas mileage versus electric mileage.
“Reducing rates for plug-in hybrids strikes the right balance between fairness, protecting motorist privacy and minimizing administrative burden on motorists,” the Treasury said.
Mr Sillitoe is now “scratching his head” as he considers buying his next car before pay-per-mile is introduced in 2028 – a conundrum that industry leaders fear will force PHEV owners back to petrol or diesel cars.
Philip Nothard of consultants Cox Automotive Europe said: “The timing of this announcement feels particularly unhelpful. The message can be sent once the details are finalized – this policy clearly risks suppressing demand.”
Fed-up drivers on social media have vowed to ditch hybrid cars in favor of regular internal combustion engines. This is the exact opposite of what the government wants people to do. Rosemary Banks wrote on social media platform
Before Rachel Reeves’ bombshell pay-per-mile announcement, the days of hybrid cars were already numbered. But their demise may now be hastened.
Manufacturers – who can sell hybrid cars in the UK by 2035 – are likely to speed up plans to phase out hybrid cars.
The Office for Budget Responsibility predicts that the pay-per-mile tax will reduce electric vehicle sales by 440,000 units over the next five years. No data has been released to predict the impact it will have on plug-in hybrids, but dealers expect the impact to be significant.
“I think they will fade away,” said Umesh Samani of the Independent Automobile Dealers Association. “There will be an oversupply situation and more plug-ins will be sold as owners look to get rid of them. That will mean lower prices, which won’t help current owners.”
Another oddity about this tax is that even miles driven abroad will be charged. Kuga driver Mr Troughton, a Northern Ireland accountant, will be fined for driving miles on foreign roads in the Republic of Ireland.
Geoffrey Troughton says chancellor has destroyed any incentive to buy plug-in hybrids – Charles McQuillan
The Treasury acknowledged this could be a problem but said a “small proportion” of the number of people drive abroad each year would not exempt foreign mileage.
Mr Troughton said: “If I drive my car into Dublin I am driving in the Republic of Ireland and paying the Chancellor of the Exchequer for it.
“When I bought my engine in July, the first thing I did was take it to France, but they would charge me for that too. It all seemed wrong.”
He added that charging in Northern Ireland was more expensive than on the mainland.
“Locally we have BP pulse chargers at 89p per kWh. I get about 33 miles on the 14.4kW battery. For me that’s about 38p per electric mile and if I fill it up at Tesco I get 50 miles per gallon which is about 11p per mile,” he said.
“So it’s not economical to charge the car anyway. But now, even though I don’t drive an electric car, I’m paying an extra 1.5p just because it has a plug.”
Plug-in hybrids now account for one in 10 new car sales, according to the Society of Motor Manufacturers and Traders.
So far this year, 208,000 have been purchased, a 34% increase from 2024. Healthy figures were supported by business buyers as plug-in hybrids are attracted by businesses due to their generous benefit-in-kind tax rates, but new emissions standards will erode tax benefits from 2028.
Ginny Buckley of electric vehicle consultancy Electrifying.com believes plug-in hybrids only make financial sense for drivers who can charge regularly at home or work at the cheapest price and rarely use the tank. “If you can do that, you’re probably better off going all-electric anyway and have lower running costs overall,” she said.
Try full access to The Telegraph for free now. Unlock their award-winning website and essential news app, plus helpful tools and expert guidance on your money, health and holidays.
