UK Car Industry Calls for Tax Incentives to Boost Electric Vehicle Adoption

The UK car industry is urging the government to introduce tax incentives to encourage more motorists to switch to electric vehicles (EVs). The Society of Motor Manufacturers and Traders (SMMT) has highlighted the declining demand for battery-powered models among private buyers and warned that this could hinder the country’s progress towards achieving net zero emissions targets.

Mike Hawes, CEO of the SMMT, emphasized the need for incentives to move the EV market from the early adopter phase to the mass market. The UK government aims to ban the sale of new petrol and diesel cars by 2030 (with some exceptions until 2035), but currently, EVs only account for 16% of new vehicle sales, with the majority being purchased by businesses.

One of the key issues affecting private buyer adoption is the reduction in direct purchase incentives. While company car schemes and salary sacrifice programs still offer tax incentives for EV purchases, private buyers no longer benefit from the “plug-in car grant” that was discontinued last year. This has resulted in a stagnation in demand among mainstream non-business buyers, according to Alex Smith, head of Volkswagen in the UK.

To address this, the SMMT is calling for a reduction in value-added tax (VAT) on EVs and a halt to plans to increase the vehicle excise duty from 2025. The industry body also urges the government to set mandatory targets for the installation of public charging points, as the lack of a comprehensive charging infrastructure is seen as a major barrier to wider EV adoption.

Richard Bruce, head of transport decarbonisation at the Department for Transport, acknowledged the challenge of setting charging targets but acknowledged the importance of government support in developing the charging infrastructure.

In addition to these measures, car manufacturers also need to address consumer concerns. Mainstream buyers still have questions about the availability of charging infrastructure outside of London and the South East. There is also a perception that EVs are inherently expensive, despite their lower running costs and servicing expenses.

Overall, the UK car industry is calling for a multi-faceted approach that combines tax incentives, infrastructure development, and consumer education to accelerate the transition to electric vehicles.

Sources: SMMT, Department for Transport