The automotive industry is rallying for a renewed focus on the UK’s electric vehicle (EV) transition in the upcoming budget, advocating for fair taxes to expedite the shift towards cleaner transportation. Recent research commissioned by the Society of Motor Manufacturers and Traders (SMMT) underscores a growing trend of potential EV adopters delaying their switch, with a three-point tax reform plan identified as the key to revitalizing the market and accelerating progress towards net zero.
According to the survey conducted by Savanta on behalf of SMMT, the decision to extend the end-of-sale date for new petrol and diesel cars and vans from 2030 to 2035 has prompted nearly a quarter of drivers (24%) to postpone their EV plans, while 14% have abandoned the idea altogether. Despite the UK maintaining its position as Europe’s second-largest new electric car market, private retail uptake has declined since 2022, posing a threat to achieving the country’s net zero goals.
The research indicates a shift in sentiment, with almost half (46%) of potential EV drivers now willing to wait until after 2030, compared to just 11% in September 2023. Barriers cited by 73% of consumers include vehicle affordability, chargepoint availability, and chargepoint costs.
To reinvigorate the EV market, SMMT proposes a three-point tax reform plan in the upcoming budget:
Halving VAT on New EVs: SMMT asserts that reducing VAT on new EV purchases would be the most effective measure to encourage drivers to make the switch sooner. Nearly 40% of interested EV drivers and 26% of those initially uninterested believe a VAT cut would expedite their plans.
Fair Vehicle Excise Duty (VED): SMMT calls for changes to forthcoming VED rates to ensure fairness. The planned VED changes in 2025 could subject seven in ten currently sold EVs to an ‘expensive car’ supplement, discouraging potential buyers.
Equal Taxation on Public Charging: The industry advocates for a reduction in VAT on public charging from 20% to 5%, aligning it with home charging. The current tax system discourages drivers without access to home chargers, imposing four times more tax on those without off-street parking.
SMMT Chief Executive Mike Hawes emphasized the significance of the budget as a critical opportunity to revitalize the EV market, calling for fair taxation to dispel uncertainty and encourage motorists to transition away from fossil fuels. Hawes highlighted the potential economic and environmental benefits, including cleaner air, quieter roads, and reduced running costs, resulting from successful EV adoption.