Office for Budget Responsibility lowers EV forecasts as uptake continues to slow

  • Watchdog lowers forecast for sales of electric cars
  • Office for Budget Responsibility says EVs will account for 38 per cent of new car sales in 2027
  • As recently as March, the body was backing electric cars to have a 67 per cent market share

Time 8:23 am, November 24, 2023

A public watchdog has lowered its forecast for the sale of electric cars after growth in take-up slowed majorly.

The Office for Budget Responsibility (OBR) expects electric vehicles to make up a 38 per cent of new car sales in 2027, according to a report prepared for this week’s Autumn Statement.

The figure is well down on previous forecasts with the OBR backing new EVs to have a 67 per cent market share by 2027 as recently as March.

The body added that 2022/2023 has also fallen below expectations with EV accounting for 16.5 per cent of new car sales compared the OBR’s March forecast of 17.7 per cent.

The fiscal watchdog said generally higher upfront costs of electric cars would ‘likely still be disincentivising many consumers’, adding this particularly related to purchases using car finance as interest rates were significantly higher than anticipated in 2022.

Experts also commented that the availability of public charging points ‘seems to be a concern for many drivers’ and warned that the cost advantage of electric vehicles charged away from home was ‘significantly less and can become negative’.

Commenting on the findings,Ian Plummer, commercial director at Auto Trader, said: ‘The OBR’s warnings that electric vehicle adoption is slowing simply underlines the urgency of making them more affordable.

‘With the ban on new petrol and diesel sales delayed, drivers need more incentives to make the switch – they need more affordable cars, and confidence in charging points and running costs.

‘The Chancellor has started the job by cutting red tape and planning restrictions on electric charging points and boosting business investment, which should bring down costs.

‘But there is more he could do, for example by cutting VAT on public charging points to level the playing field with those charging at home.’

The OBR report found that the government’s decision to push back the ban on new ICE cars  to 2035 may result in some consumers delaying a switch to electric cars.

It said the main policy driver for electric vehicle uptake was the Zero Emission Vehicle (ZEV) mandate, taking effect in January 2024, which sets a minimum share of cars and vans sold by each manufacturer to be zero emission.

In his autumn statement on Wednesday, Chancellor Jeremy Hunt announced £2bn of future investment into zero-emission vehicle production in the UK.

Hunt said that the support would be available for the five years to 2030 for zero-emission vehicle manufacturing.

The Chancellor added that the announcement had been ‘warmly welcomed by Nissan and Toyota’, which both had significant car production operations in Sunderland and Derby respectively.

Jack Williams's avatar

Jack joined the Car Dealer team in 2021 as a staff writer. He previously worked as a national newspaper journalist for BNPS Press Agency. He has provided news and motoring stories for a number of national publications including The Sun, The Times and The Daily Mirror.

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