Reformed Taxations On SUVs Can Fuel Growth Of EVs Globally: Report

In 2023 China EV Witness 35% Rise YoY, As US and EU Struggle: Rystad

A latest report by the Global Fuel Economy Initiative (GFEI) pointed out at the need of bringing a reform in taxation on cards based on their weight and prices. The report talked about the role of weight-based taxation in improving energy efficiency within the SUV (Sports Utility Vehicle) market. The report considers the environmental impact of SUVs and evaluated the integration of weight and prices as parameters for vehicle taxes at both national and local levels and how such measures and lead to increased electric mobility across the globe. 

SUVs and Their Environmental Impact:

The report finds that the SUVs possess a larger environmental footprint compared to smaller vehicles. It recommends reforms in vehicle taxation and suggests incorporating weight and prices. Such reforms could encourage a shift towards electric vehicles (EVs) without compromising government budgets.

Analyzing the impact of SUVs on energy consumption, the report reveals that the growing preference for larger and heavier vehicles contributes to direct CO2 emissions and adds to carbon footprints. It includes factors such as vehicle weight, size, and power play in evaluating this trend. 

Electric Vehicles and Their Carbon Footprint:

Examining the influence of EVs on the carbon footprint, the report identifies a positive correlation between EV sales and energy efficiency improvements. Regions like China and Europe, with higher EV uptake, experience a more pronounced yearly improvement rate compared to North America, where larger vehicles dominate the market.

The report finds that worldwide the pace of annual reduction in energy consumption per km declined over the 2010s. It associates this development with increase in the sales shares of electric vehicles. It has begun to ramp up which has in turn brought acceleration in energy efficiency improvements. this the report witness is seen in recent years from 2019 onwards, mainly due to the uptake of EVs, which include both BEVs. 

India’s Unique Scenario:

Delving into the Indian market, the report acknowledges the prevalence of small car sales due to a history of high fuel taxes. Recognizing the link between SUV weight and emissions, it stresses the need to consider average vehicle weight and size for a comprehensive impact assessment.

Financing the Electric Vehicle Transition:

The report proposes leveraging fossil fuel taxes as carbon pricing mechanisms to finance the transition to EVs. It advocates for sustainable finance frameworks aligning decisions by investors, corporations, and other entities with evolving taxonomies related to vehicle weight.

The report suggests developing weight-based taxation and energy efficiency. It finds that both weight and footprint have been steadily increasing since 2010, primarily driven by the shift to SUVs. While there’s been a recent slowdown in vehicle footprint growth post-2020, there is a continued increase in vehicle weight, influenced notably by the adoption of EVs with heavier batteries.

Global Variances in SUV Trends:

The report, based on global variances in SUV trends, identifies significant gaps in SUV footprint changes, with China leading in EV focus and Europe emphasizing improved technologies for internal combustion engine vehicles (ICEVs). Notably, the United States maintains a higher average LDV weight, with India showcasing a shift towards larger vehicles and SUVs.

Enhancing Energy Efficiency: Proposing Weight-Based Taxation for SUVs

Regulatory Landscape and Taxation:

Acknowledging existing regulations worldwide, the report emphasizes the deployment of emissions reduction policies, especially for light-duty vehicles (LDVs). It underscores examples such as France’s feebate scheme and Norway’s weight-based tax on ICEVs.

Regulatory Landscape and Taxation:

Conclusion:

In conclusion, the GFEI report advocates for a nuanced approach to taxation policies, with a particular focus on weight-based measures to curb the SUV trend and promote energy-efficient alternatives. It underscores the need for global cooperation and innovative financing to navigate the transition towards a sustainable automotive landscape.