The Importance of Government Incentives for Consumer Electric Vehicle Adoption

The Society of Motor Manufacturers and Traders (SMMT) is urging the government to implement incentives targeted at consumers in order to drive mass market adoption of electric vehicles (EVs). Currently, fleets and businesses are leading the electric transition, while private buyers have been discouraged by the end of incentives. However, with the ambitious timeline of phasing out internal combustion engine (ICE) vehicles by 2030, it is crucial to include private buyers in this transition.

Battery electric cars have experienced significant growth over the past five years. While they accounted for just 0.7% of new car sales in 2018, they are projected to represent 17.8% by the end of this year. Nevertheless, in order to meet net zero ambitions and the proposed zero emission vehicle mandate, the market must move even faster. This requires a “faster and fairer” transition that encompasses private consumers.

However, the removal of the Plug-in Car Grant (PiCG) in 2022 has resulted in declining sales to private buyers. Many potential EV owners are hesitant due to concerns over affordability and the availability of a nationwide charging network. According to a survey by Savanta, 68% of non-EV drivers express a desire to switch to electric vehicles, but only 2% plan to make the investment this year.

To encourage private buyers to adopt electric vehicles, the car industry is calling for government-backed incentives. The industry suggests measures such as reducing VAT on EV purchases, raising the threshold for Vehicle Excise Duty, and mandating targets for charge point rollout. These incentives would make EVs more affordable and address concerns about charging infrastructure. Additionally, they would contribute to the recovery of the automotive industry from the pandemic while benefiting the economy, society, and the environment.

Mike Hawes, SMMT chief executive, emphasizes the need for a comprehensive package of measures to match supply and demand, particularly with the imminent zero emission vehicle mandate. Such incentives would encourage households across the UK to transition to electric vehicles, supporting the industry and delivering positive outcomes for various stakeholders.

Source: Society of Motor Manufacturers and Traders (SMMT)

Definitions: Plug-in Car Grant (PiCG) – A government initiative offering a subsidy to reduce the upfront cost of eligible electric and plug-in hybrid vehicles.

Source: Savanta