News analysis
Halve VAT on EVs, Chancellor told
Continuing disparity in EV demand has prompted an industry appeal for drastic tax action. Sean Keywood reports.
he Society of Motor Manufacturers and Traders (SMMT) has called for the government to temporarily halve the VAT rate applied to new EV purchases with next month’s Budget.
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It made the appeal as it published its latest monthly new car sales figures, showing the UK had passed the one million EV milestone. However, the figures also revealed that private EV registrations were down by 25% year-on-year in January – although they were up by 21% overall, boosted by fleet demand.
Hawes said: “It’s taken just over 20 years to reach our million EV milestone – but with the right policies, we can double down on that success in just another two. “Market growth is currently dependent on businesses and fleets. Government must therefore use the upcoming Budget to support private EV buyers, temporarily
halving VAT to cut carbon, drive economic growth and help everyone make the switch.
“Manufacturers have been asked to supply the vehicles, we now ask government to help consumers buy the vehicles on which net zero depends.” Also commenting following the publication of January’s sales figures, Novuna Vehicle Solutions managing director Jon Lawes said: “The UK’s automotive sector recorded significant private and public investment commitments last year, which is vital to EV transition, but political uncertainty around future commitments to developing green infrastructure threatens to undermine confidence for drivers to make the switch. “Rather than political posturing, we need collaboration at national and local level, to build a robust and accessible network of fast public chargers and ensure
the UK is capable of delivering its net zero ambition.”
Lex Autolease managing director Nick Williams said: “These figures represent a positive start to the year for EV uptake. We expect to see this trend continue through 2024 as businesses ramp-up EV adoption and models become more accessible to drivers, driven by increasing competition and a strengthening used market. “But there is still more work to do to encourage the mass adoption the UK needs to deliver on its decarbonisation targets. A rapid and fair charging infrastructure roll-out, an enduring commitment to the ZEV mandate, clarity on BIK rates beyond 2028, better information for would-be EV drivers and a new national battery strategy must be the focus.”
Overall, the UK new car market saw an 8% year-on-year increase in January, with 142,876 new cars registered during the
month, making it the strongest January for the market since 2020, and representing 18 consecutive months of growth. This included a year-on-year rise of 29.9% for fleet registrations, which came in sharp contrast to private registrations, as these fell by 15.8%. Business registrations, classed as those to fleets with fewer than 25 vehicles, were down by 17.7%. In terms of fuel mix, alongside the aforementioned EV figures, which saw EVs account for 14.7% of the market, plug-in hybrid registrations rose by 31.1% for an 8.4% market share, while conventional hybrids were down by 1.2% for a 13.1% share.
Petrol car registrations were up by 7.5%, taking 57.3% of the market, while diesels were down by 10.1% for a 6.5% market share. Mild hybrids are now being included within petrol and diesel car sales figures by the SMMT.
“Manufacturers have been asked to supply the vehicles, we now ask government to help consumers buy the vehicles on which net zero depends.”
10 | February 2024 |
www.businesscar.co.uk
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