Automotive Sector Seeks Government Lifeline as Electric Vehicle Sales Wane

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Automotive Sector Seeks Government Lifeline as Electric Vehicle Sales Wane

Urgent Appeal for Chancellor’s Action in Light of Declining EV Market

The automotive world is at a crossroads, with the Society for Motor Manufacturers and Traders (SMMT) making a fervent plea to the Chancellor for crucial support to reignite the dwindling sales of electric vehicles (EVs). This call for action underscores a critical juncture for the industry, seeking government aid to facilitate a smoother evolution towards electric transportation.

Impact of Postponed Ban on EV Sales

The industry’s request comes against the backdrop of a controversial decision by Prime Minister Rishi Sunak to delay the ban on new petrol and diesel vehicle sales to 2035, extending the original deadline of 2030. This move has been met with widespread criticism from the automotive sector, which views it as a significant factor contributing to the current unfavourable EV climate. Critics argue that this postponement has not only impeded investment but also marked a regressive step in the collective effort to mitigate climate change impacts.

Despite the UK’s position as a leading EV market in Europe by volume, recent statistics have highlighted a concerning trend: a 19% decrease in private EV purchases year-on-year in 2023, following the elimination of consumer incentives. This downturn is particularly alarming as it signals a pause in the momentum towards electric vehicle adoption.

Consumer Hesitancy and SMMT’s Three-Point Revival Plan

Survey findings released by the SMMT reveal an alarming shift in consumer behaviour, with almost half of potential EV buyers indicating plans to postpone their switch to electric until after 2030— a significant increase from the previous year’s figures. This delay in adoption underscores the pressing need for targeted support from the government.

To combat these challenges, the SMMT has proposed a comprehensive three-point strategy aimed at recharging the EV market and propelling the UK towards its net-zero goals. A pivotal aspect of this plan involves a reduction in VAT on new electric vehicles from 20% to 10%, a move anticipated to save the average buyer approximately £4,000 on upfront costs. This approach is presented as a more financially viable alternative to the phased-out Plug-in Car Grant.

Moreover, the SMMT calls for an overhaul of Vehicle Excise Duty to avert the majority of electric vehicles from being dubbed “expensive cars”, which would subject them to an impending tax supplement next year. Additionally, the proposal includes adjusting the VAT on public charging points to 5%, thereby aligning it with home charging rates and enhancing overall accessibility.

A Call to End Fiscal Disincentives and Embrace Electric Mobility

Mike Hawes, CEO of the SMMT, stressed the importance of the Chancellor addressing the current “perverse fiscal system” that deters drivers from transitioning away from fossil fuels. He advocated for a clear government directive affirming that the era of electric vehicles is upon us.

“The time to go electric is now,” Hawes declared, envisaging a future driven by zero-emission vehicles—a future where cleaner air, quieter streets, and lower running costs are the norm. However, realising this future hinges on dispelling the prevailing uncertainty among motorists, a task that now demands immediate and decisive budgetary interventions.