Why is Volvo the first major car manufacturer to truly embrace the fuel technology of the future?

Because the green revolution is already here. The UK government may have announced that the sale of cars powered solely by an internal combustion engine will be banned from 2040, but Volvo is already leading that revolution by announcing that every new model launched from 2019 will have an electric motor, placing electrification at the core of its strategy. This isn't just the right step for the planet but in just three years' time it will be the right step for every company car driver in the UK.

On the face of it new technology comes at a price, but if you look beyond the purchase price you'll find that's not the case with Volvo’s new range of Plug-in Hybrid Vehicles (PHEVs). For instance, rather than focussing on the purchase price or the lease rental, if you consider the whole life costs of an Ultra-Low Emission Vehicle (ULEV), such as the new V90 2.0 T8 Hybrid R DESIGN Pro 5dr AWD Geartronic, you'll discover that it's actually more cost effective than many of its competitors. And, from April 2020, when the taxation of ULEVs changes, the whole life costs and BiK tax should be even cheaper, making this car even more cost effective.

For a number of years, the UK government has been encouraging the motor industry to accelerate the transition from fossil to greener fuels by introducing a range of CO₂ emissions based tax policies, the latest of which is an increase of the supplement applied to the BiK tax of most diesels. However, because of its need to raise revenue these tax incentives are being diluted, and by 2020 ULEVs with CO₂ emissions between 0 and 50 g/km will be subject to a BiK percentage of 16%, undermining the objective of moving from the old technology to the new.

Recognizing this, two recent announcements highlight the government’s determination to make the cars on Britain's roads greener by shifting the focus of fleet managers toward ULEVs. Firstly, cars with CO₂ emissions below 76 g/km were exempted when optional remuneration arrangements were introduced earlier this year. Secondly, realising it needed to incentivise manufacturers to increase the zero-emission range attainable by a ULEV on one full charge, the government will introduce a radical change in the calculation of BiK tax as outlined below.

From April 2020, cars with emissions of 50 g/km or less will be taxed much more favourably than other cars as follows:

• cars emitting 0 g/km will have a BiK percentage of just 2%; and
• cars with emissions between 1 g/km and 50 g/km will have BiK percentages ranging from 2% to 14%, depending on the zero-emission range of the car.

This means the BiK tax on all models across the Volvo PHEV spectrum is set to fall from April 2020, with the BiK percentage for the V90 T8 Hybrid, which boasts CO₂ emissions of 46 g/km and a zero-emission range of 31 miles, falling by a quarter, from 16% to 12%.

Within the V60, XC60, S90, V90, and XC90 models, Volvo already offers PHEVs to suit most lifestyles, many of which are eligible for the government's plug-in car grant.

Published 1 December 2017

1. For further information please refer to the 2017 Autumn Budget Summary .