8:26 am, October 4, 2024
The bosses of several leading carmakers have joined the SMMT in penning an open letter to the government, urging them to cut VAT on new EVs amid ‘barely moving’ demand.
The trade body has today published its latest new car registration figures and ahead of the release, bosses called for additional incentives to get drivers into EVs.
Among the suggestions put forward was a tax cut on public charging points, amid a cost discrepancy compared to plugging in at home.
Directors also admitted that several manufacturers are likely to fall short of ZEV mandate targets, which could result in hefty fines.
The much-debated government legislation requires a certain percentage of the sales of every car manufacturer to be electric, otherwise, firms will face financial penalties.
This year, the required percentage is 22 per cent, rising each year to 80 per cent in 2030.
However, in their open letter, industry leaders claim that EV demand is ‘barely moving’ ahead of the release of September’s official data.
Going into more detail, they suggested slashing VAT on new EV purchases by as much as 50% for a three year period.
Experts estimate that the move would cost the Treasury around £7.7bn by the end of 2026 but help significantly in increasing EV uptake.
Another suggestion was to align VAT on public charging points, which currently face the full tax rate, with the reduced 5% rate applied to home charging.
Firms also want infrastructure targets for charging points, similar to those set for EV sales, and for a delay in the introduction of road tax on EVs.
Finally, they called for the plug-in van grant to be extended past its current expiry date in March.
The letter is signed by SMMT boss Mike Hawes as well as the UK bosses of Ford, BMW, JLR, Honda, Kia, Mercedes, LEVC, Nissan, Polestar, Stellantis, Toyota and Volkswagen Group.
Writing to the government, the SMMT said: ‘We appreciate the severe constraints on the public purse but deliver this support to consumers and the benefits are myriad: a thriving market, enhanced consumer choice and affordability, investment attractiveness, high value job creation, cleaner air, quieter streets and economic growth.
‘We know your government is committed to a vibrant and competitive UK automotive industry.
‘With the right measures, the right consumer support, we can fix the foundations of this transition and with it deliver the biggest technology transition ever attempted, and the economic growth and environmental improvements that should be non-negotiable.’
It is hoped that some of the suggestions will be adopted in the upcoming budget – the first since Labour won power.
However, the government was remaining tight-lipped when pressed on the issue.
A spokesman the Treasury said: ‘We do not comment on speculation around tax changes outside of fiscal events.’
