UK Auto Industry Calls for EV Tax Cuts as Sales Targets Loom

The UK’s auto industry is sounding the alarm over sluggish electric vehicle (EV) sales, warning that missing government-set targets could lead to hefty fines for manufacturers and pricier cars for consumers. This news comes from a Financial Times report detailing the industry’s plea for tax incentives to boost the EV market.

Industry Warns of Missed Targets and Economic Consequences

Mike Hawes, CEO of the Society of Motor Manufacturers and Traders (SMMT), has penned an open letter to Chancellor Rachel Reeves, highlighting the lack of fiscal incentives for private consumers to switch to EVs.

“Unfortunately, the private consumer has no fiscal incentive to switch and so our [zero emission vehicle] market looks set to miss its target,” Hawes wrote, adding that the consequences would be both “environmental” and “economic.”

EV Sales Slowing Despite Government Targets

Electric cars made up 17.8% of new vehicle sales in the UK in 2023, with projections reaching 18.5% by year’s end. However, this falls short of the 22% required under a new sales scheme. The industry’s struggling to meet targets has led to some unexpected market dynamics:

  • Carmakers are raising prices on petrol cars
  • Heavy discounts are being offered on EVs, squeezing profit margins
  • Growth in consumer demand for diesel outpaced EVs in September

Industry’s Proposed Solutions

To address these challenges, the auto industry is proposing several measures:

  1. Halving VAT on new EV purchases for three years
  2. Reducing VAT on public charging to match home charging rates
  3. Providing support for those who can’t charge EVs at home

“With the right measures, the right consumer support and the right ecosystem, we can fix the foundations of this transition,” Hawes stated.

Regulatory Pressure and Potential Fines

Under current rules, 22% of vehicles sold by each carmaker in the UK this year must be zero-emission, with the percentage rising to 80% by 2030. Failure to comply could result in fines of £15,000 ($18,300) per vehicle, pushing manufacturers like Ford and Volkswagen to scramble for compliance through credit purchases.

EVXL’s Take

The UK’s struggle with EV adoption mirrors challenges seen in other markets. As we’ve reported in our Tesla coverage, even industry leaders are feeling the pressure of slowing EV sales growth. This situation underscores the need for a comprehensive approach to EV adoption, balancing manufacturer incentives, consumer benefits, and infrastructure development. The UK’s response to this industry plea could set a precedent for other nations grappling with similar EV transition hurdles.

What are your thoughts on the UK’s EV market challenges? Should the government step in with tax incentives, or should the industry bear the responsibility? Share your views in the comments below.

Photo courtesy of Polestar.


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Haye Kesteloo
Haye Kesteloo

Haye Kesteloo 是以下网站的创始人和主编 EVXL.co他在该网站报道所有与电动汽车相关的新闻,涉及的品牌包括特斯拉、福特、通用、宝马、日产等。他在无人机新闻网站 DroneXL.co.您可以通过以下方式联系 Haye:haye @ evxl.co 或 @hayekesteloo.

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