UK Electric Car Goals Unachievable Without Purchase Incentives

Lobby groups, car makers, and even the House of Lords have called for incentives to spur private market demand for electric cars. However, the government’s lack of support is hindering the achievement of its own mandate that 22% of new car sales must be electric by 2024.

Industry Calls for Incentives

The Society of Motor Manufacturers and Traders, the boss of Britain’s biggest car seller, and the House of Lords have all voiced their support for incentives to boost demand for electric vehicles (EVs). In January, the private market as a whole experienced a 16% year-on-year drop in sales.

Suggested measures include reducing the VAT on new EV purchases from 20% to 10% and reintroducing the Plug-in Car Grant for smaller and more affordable EVs. Other potential support includes lowering the VAT rate on public charging from 20% to 5% and extending the EV-favoring benefit-in-kind tax rates.

During the Autocar Business Live webinar, incentives for EVs were the dominant topic of discussion. Stellantis’s UK sales boss, Eurig Druce, highlighted that speculation about the return of incentives and the government’s silence on the matter create uncertainty among potential buyers. This uncertainty may lead buyers to delay their purchase in hopes of receiving imminent assistance from the government.

Government’s Incomplete Strategy

Eurig Druce also criticized the government’s strategy around EVs, stating that it focuses on compelling supply but neglects to stimulate demand. He argued that achieving the government’s EV sales targets can be done in two ways: by reducing the supply of internal combustion engine (ICE) cars to artificially boost EV sales or by actively selling EVs. The latter is the preferred outcome, but it is more challenging to accomplish.

Robert Forrester, CEO of Vertu Motors, emphasized that without incentives, the government’s Zero Emission Vehicle (ZEV) mandate is unlikely to succeed by 2024, let alone achieve the goal of 80% EV sales by 2030. He questioned why the UK’s target is significantly ahead of the EU’s target in an integrated industry.

Forrester believes that the government will eventually realize the ineffectiveness of its current policy and backtrack on it. He also expressed doubts about the government’s financial capability and willpower to support the policy in the meantime. There is a growing sense of frustration within the industry regarding the government’s lack of proper backing for its own policies and legislation.

The Need for Financial Incentives

Private buyers require financial incentives to transition to electric cars. Eurig Druce highlighted the strong evidence that the previous Plug-in Car Grant played a significant role in increasing EV adoption. Even car manufacturers that are supportive of EVs acknowledge the need for assistance in selling these vehicles. Dealers also find the government’s intervention unwelcome and struggle to understand its rationale.

The government’s silence on the matter is becoming increasingly noticeable and concerning.