In response to the UK government's latest budget announcement, the automotive industry has voiced its disappointment over the absence of subsidies aimed at boosting the adoption of electric vehicles. The decision comes at a time when the growth in demand for zero-emission cars has shown signs of slowing down.
Previously, the UK had implemented incentives to encourage consumers to opt for EVs, but these have been gradually phased out. The recent budget, however, disregards industry appeals to support private EV sales through reductions in Value Added Tax (VAT) and Vehicle Excise Duty (road tax).
The Society of Manufacturers and Traders (SMMT) had presented a comprehensive set of proposals to the Chancellor ahead of the budget announcement. These included calls to halve VAT on private electric car purchases, exempt EVs from certain road tax supplements, and reduce VAT on public EV charging.
Despite these pleas, the Chancellor chose not to incorporate these measures, leaving the burden of the high cost of electric cars primarily on manufacturers. Statistics from the SMMT reveal that less than one in five new fully-electric vehicles registered in Britain were bought by private individuals, with the majority being acquired by corporate fleets.
The UK's auto industry in February:
“Government has been keen to assure the UK automotive industry’s competitiveness, with support for EV development and manufacturing – including £2.1 billion in autumn’s Advanced Manufacturing Plan – but there is little to help consumer demand. Today’s Budget is, therefore, a missed opportunity to deliver fairer tax for a fair transition. Reducing VAT on new EVs, revising vehicle taxation to promote rather than punish going electric, and an end to the VAT ‘pavement penalty’ on public charging would have energised the market. With both Government and industry having statutory requirements to deliver net zero, more still needs to be done to help consumers make the switch,” Mike Hawes, SMMT Chief Executive, commented
The lack of EV incentives has drawn criticism from major players in the industry, including Stellantis-owned brands Fiat and Vauxhall. Vauxhall, particularly significant in the UK automotive manufacturing sector, has joined the chorus of disapproval, highlighting the adverse impact this decision may have on the industry's growth trajectory.
“Whilst there are strong incentives for company car drivers to make the switch to electric, including for those choosing luxury vehicles, the private buyer who wants a more attainable small or family car receives nothing. If we are to meet the rightly ambitious targets laid out in the ZEV mandate, then there needs to be incentives for private car buyers to make the switch to electric, as there are in the majority of European nations," Vauxhall managing director James Taylor said in an interview with Autocar.
EV industry news:
Damien Dally, Managing Director of Fiat UK, also expressed disappointment, stressing the importance of government support in facilitating the transition towards sustainable mobility solutions.
“It’s hugely disappointing that the Chancellor has failed to reinstate financial incentives for electric vehicle buyers in today’s budget,” Dally told AutoExpress. “The numbers don’t lie, private sales account for fewer than one in five electric car registrations in 2024 – and the overall market share is way below the 22 per cent mandated by the government as part of the ZEV Mandate. The demand for electric vehicles is waning and we are sleepwalking into an electric vehicle crisis. The government is also potentially putting its Net Zero target at risk. Without any government financial, incentive there’s no reason for the consumer to make the switch.”