An electric car being charged, via PAAn electric car being charged, via PA


Chancellor is urged to bring in ‘fair taxes for a fair transition’ to boost EV uptake

  • New research shows nearly quarter of would-be EV buyers will now wait until after 2030 to switch
  • 14% say they’ll never make the swap now, says SMMT
  • Industry body wants Budget to include EV tax breaks to boost demand
  • VAT cut seen as most popular incentive for drivers

Time 7:18 am, March 1, 2024

The chancellor of the exchequer is being urged by the SMMT to use next Wednesday’s Budget to get the UK’s shift to electric vehicles back in the fast lane.

It wants Jeremy Hunt to bring in ‘fair taxes for a fair transition’, after new research commissioned by the industry body revealed that more and more would-be EV drivers are now likely to delay their switch to a battery-electric car.

The SMMT said tax reform would recharge the market and accelerate the UK’s progress towards net zero.

The online survey of 2,127 UK adults carried out by Savanta between February 16 and 18 found that last September’s decision to delay the end of sale of new petrol and diesel cars and vans from 2030 to 2035 had led to almost a quarter of drivers (24%) delaying their plans.

Meanwhile, one in seven (14%) say they’ll never make the switch now.

Although the UK is still Europe’s second-largest new electric car market by volume with the actual number of EVs on UK roads rising, the rate of growth has slowed and EV market share has stabilised, says the SMMT.

There were 314,687 battery-electric vehicle (BEV) registrations in the UK last year, according to SMMT figures. Germany topped the league with 524,219.

The UK’s new BEV registration growth dropped by more than half from 40.1% in 2022 to 17.8% last year.

New BEV market share went from 16.6% in 2022 to 16.5% in 2023.

The SMMT said growth in the market was being sustained by fleets and businesses, thanks to generous tax incentives.

However, private uptake has been falling since 2022, with these buyers now accounting for fewer than one in four new EV registrations versus one in three previously – it was 33.3% in 2022 but only 22.9% in 2023.

The SMMT now fears that this change in sentiment may jeopardise the UK hitting its net zero goals.

PA photo dated 15th March 2023 of Jeremy Hunt with red box

Will Jeremy Hunt have good news for the EV sector in next Wednesday’s Budget? File photo: Victoria Jones/PA

It said the Budget was a chance to put Britain’s electric switch back on track, supporting drivers to go green by halving VAT on new EVs, changing upcoming vehicle excise duty (VED) rates so EVs are treated as essentials, not luxuries, and giving drivers more affordable public charging.

The SMMT’s research shows that a VAT cut on EVs is the single most effective measure that would encourage drivers to go electric sooner.

Almost four in 10 drivers (37%) who were interested in going electric said a VAT cut would accelerate their plans – and even a quarter of drivers (26%) who weren’t interested in switching named it as the option most likely to change their mind.

Halving VAT on new EV purchases would save the average buyer some £4,000 off the upfront purchase price but would cost the Treasury less than the scrapped plug-in car grant, said the SMMT.

It would also put another 270,000 EVs – instead of petrol or diesel – on the road over the next three years, bolstering supply to the used EV market, where uptake rose by 90.9% last year.

Changes to VED due in 2025 – announced before the pandemic, economic downturn and EV demand weakening – will lead to some seven in 10 EVs that are currently sold being subject to an ‘expensive car’ VED supplement, said the SMMT.

EV buyers will effectively be penalised to the tune of £1,950 for choosing to buy an electric car – even though new mandated EV sales targets are intended to encourage take-up.

The SMMT also wants to see an end to the imbalance of taxation on public charging, with VAT reduced from 20% to 5% in line with home charging.

Mike Hawes, SMMT chief executive, said: ‘The Budget is a crucial opportunity to re-energise the EV market, with fair taxes for a fair transition.

‘The chancellor must end the perverse fiscal system that discourages drivers from moving away from fossil fuels and send a clear signal that the time to go electric is now.

‘Success will see our economy powered up by zero-emission mobility, delivering cleaner air, quieter roads and cheaper running costs, ending the uncertainty we are seeing among motorists.’

John Bowman's avatar

John has been with Car Dealer since 2013 after spending 25 years in the newspaper industry as a reporter then a sub-editor/assistant chief sub-editor on regional and national titles. John is chief sub-editor in the editorial department, working on Car Dealer, as well as handling social media.

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