The motor industry in the UK is advocating for a reduction in VAT on electric vehicles (EVs) and charging infrastructure to stimulate market growth.
- The Society of Motor Manufacturers and Traders (SMMT) has made a formal appeal to the Chancellor, highlighting the current struggle to meet government sales targets for zero-emission vehicles.
- Despite achieving record registrations of battery electric vehicles (BEVs) in September, the market still falls short of governmental expectations.
- There is a significant drop in private demand for EVs, even amid substantial industry discounts, prompting calls for actionable change.
- Industry forecasts predict that without government intervention, the EV sector may fall short of its sustainability goals.
The Society of Motor Manufacturers and Traders (SMMT) has formally appealed to the Chancellor, proposing a reduction in VAT for electric vehicles and charging stations over the next three years. This proposal aligns with the need to meet ambitious sales targets set by the government, which mandate that 22% of new car sales and 10% of van sales must be electric by the end of the year.
Despite recording over 56,000 battery electric vehicle registrations in September, representing 17.8% of the market, the industry’s performance is still below the government’s threshold. The year-end projections estimate an increment to 18.5%—a notable gap from the government’s standards. This situation underscores the urgent need for effective measures to bridge the disparity between recorded sales and targets.
A concerning trend is noted in the drop of 6.3% in private demand for EVs. Manufacturers have offered drastic price reductions to invigorate sales, yet these efforts are anticipated to incur losses exceeding £2 billion by the close of 2023. This financial strain demonstrates the critical nature of the situation and the necessity for governmental support.
The SMMT has proposed a 50% VAT cut on new electric vehicle purchases, forecasting a potential expense of £7.7 billion to the Treasury by 2026. Additionally, they advocate for a reduction in VAT on public charging points to 5%, equating them to home charging rates, alongside mandatory infrastructure development for charging facilities. These measures are crucial to creating a supportive ecosystem for electric vehicle expansion.
Further, the SMMT suggests delaying the proposed road tax on EVs and extending subsidies for commercial electric vans beyond the current deadline. These recommendations are presented in the context of global challenges faced by the EV market, with major manufacturers scaling back their future EV projects amid reduced subsidies from European governments. The situation is compounded by the UK’s cessation of most grants for electric vehicle acquisitions, although business buyers continue to benefit from tax incentives.
Government intervention remains pivotal for the EV market to meet its environmental and commercial ambitions.
