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Car Industry Urges UK Government Action to Boost Waning Electric Vehicle Demand

Car manufacturers are sounding the alarm over slowing demand for electric vehicles (EVs) among private buyers in the UK, prompting urgent calls for government intervention to reignite interest in battery-powered cars.

Despite an overall increase in UK vehicle registrations by 1% year-on-year to 134,000 in April, driven by fleet sales, private buyer sales witnessed a significant drop of nearly 18% compared to the previous year.

Of particular concern to manufacturers is the sluggish growth in the market share of battery electric vehicles (BEVs), which saw only a marginal increase of 0.3% in the first four months of 2024 compared to the same period in 2023, reaching 15.7%. This falls short of government targets of 22% of all new car sales being BEVs, prompting industry leaders to urge swift action to reinvigorate consumer interest.

The Society of Motor Manufacturers and Traders (SMMT) has called for a package of incentives to stimulate demand, including tax cuts, purchasing incentives, and the expansion of charging infrastructure. Notably, the SMMT proposes a halving of VAT on new battery-powered cars and revisions to the threshold for taxing luxury vehicles to make EVs more financially accessible.

Highlighting the importance of bolstering consumer confidence in the EV market, the SMMT emphasizes the need for significant investment in expanding the charging point network nationwide. Despite record installations last year, the UK still lags behind with only one standard charger for every 35 plug-in cars.

Mike Hawes, Chief Executive of the SMMT, underscores the need for government support, stating, “Manufacturers cannot fund the mass-market transition single-handedly. Temporarily cutting VAT, treating EVs as fiscally mainstream, and expanding the charge point network are crucial steps to drive market growth.”

The government’s mandate for 22% of carmakers’ sales in 2024 to be zero-emission vehicles has been met with skepticism amidst the faltering EV uptake. The recent extension of the ban on the sale of new fossil fuel cars until 2035 and the cessation of EV grant schemes for private buyers in 2022 have further compounded industry concerns.

Car dealers echoed the SMMT concerns. Ian Plummer, commercial director of Auto Trader, said EVs were typically 35% dearer than traditionally fuelled petrol and diesel models, adding: “The discounts we’ve seen manufacturers offer to incentivise consumers into new electric cars seems to be working … That said, we’ll need to see even more price action to achieve mass electric adoption.”

Lisa Watson, director of sales at Close Bros Motor Finance said: “Manufacturers may have cause for concern that the number of new petrol vehicles registered continues to outdo the sales of battery electric vehicle registrations, bringing into sharp focus the work the UK government needs to do to improve inadequate infrastructure such as charging points, and allay motorist concerns to encourage adoption.”

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Car Industry Urges UK Government Action to Boost Waning Electric Vehicle Demand