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Fuel economy and taxation of plug-in hybrids

When Plug-in Hybrids (PHEVs) arrived on the UK market, people were obviously attracted by the government purchase grants, but also low company car Benefit-in-Kind (BiK) taxation, and also their impressively low CO2 emissions figures and lofty official fuel consumption statistics. Many company car users jumped on the PHEV bandwagon, reaping the benefits of that low BiK taxation, but often never bothering to actually charge up their hybrid batteries! So, they benefited from measures intended to reward the “green” lifestyle made possible by the PHEV design, whilst making little or no effort to contribute to a greener environment! Belated recognition of this unequable situation, and the mounting costs of purchase subsidies, brought about a necessary government rethink. Purchase grants for PHEV cars were discontinued in October 2018, causing an unsurprising dive in PHEV sales, and taxation of the “Benefit in Kind” system has since been progressively restructured. Scales that will become effective in April 2020 depend on the official battery range of the car, and the official CO2 emissions using supposedly tougher new WLTP test cycles. Some PHEV models have been withdrawn from the market altogether, while others have been modified to assure their future WLTP CO2 emissions would remain below 50g/km.

At the root of the problems back then was the arguably inappropriate method of producing the official figures, where a nominal distance of just 25km (15.25 miles) is assumed as the distance the car will travel without any electric assistance, using engine power alone, before being recharged. Since most PHEVs offered battery ranges of around 50km, the calculations produce official mpg figures that may often be realistic for just running about locally, but bear no relation to real life fuel economy when the hybrid battery is not frequently recharged. PHEVs used for high speed motorway cruising, with sizeable petrol engines, automatic transmissions, and battery ranges of under 50 miles, can easily deliver as little as 35 to 40mpg on long, fast journeys, when those official WLTP figures are quoted as being in excess of 150mpg. These real-life figures shocked some owners, who had obviously expected far better.

So, what better guidance can buyers and users of PHEVs expect regarding their real-world fuel consumption with the new WLTP testing regime, when it is fully integrated in April 2020, subject to some necessary, and at present delayed, legislation? Well, the test methods have changed, the new WLTP test cycle distances are greater and performed at higher speeds. Yet the results are not that hugely different from the old NEDC figures, which were far from satisfactory, because PHEVs are unavoidably complex beasts for calculating fuel consumption and CO2 emissions. To address this, buyers and owners will have the means to calculate a weighted combined fuel consumption figure, accounting for the vehicle mileage on both the battery and the combustion engine that’s more typical of longer journeys. It involves the concept of the “Utility Factor”, which relates the proportion of journey (or even annual) distance covered on the battery alone to the distance travelled on fossil fuel, and thus the total journey distance.

So plug-in hybrid cars will now have two published “electric only” range figures – a “city” range, and a combined range, using the complete WLTP cycle. Owners, and buyers like fleet operators, will have the means to calculate a weighted combined fuel consumption figure, which accounts for the vehicle operation on both the battery and combustion engine, which is more typical of longer journeys. This involves the new concept of the “Utility Factor,” which is the ratio of the distance covered in battery depleted mode to the total distance covered between two charges, including any distance travelled on fossil fuel. There’s more than a suggestion though that the “official” CO2 figures to be used with tax tables for Vehicle Excise Duty and Benefit-in-Kind are derived from a dated and dubious database of vehicle usage patterns, that produces unrealistic PHEV fuel economy figures, and CO2 emissions of 50g/km and below. This may be fine for those simply looking to escape taxation, but it means that many PHEVs in our data pages will not come near to the “official figures” for many higher mileage owners where distances covered on battery power are a relatively small proportion of total mileage. Clean diesel power may often be less polluting and more economical than a PHEV for such higher mileage open road usage patterns, which is openly admitted in publications on the subject.

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