The motor trade is looking on the UK authorities to chop VAT on new electrical autos (EVs) and public charging factors in an effort to counter a slowdown within the EV market.
The Society of Motor Producers and Merchants (SMMT) has written an open letter to the Chancellor, urging for a VAT discount on electrical automobiles and charging infrastructure for the subsequent three years.
The letter comes as producers wrestle to fulfill the federal government’s stringent zero-emission automobile gross sales targets, which mandate that 22% of all new automotive gross sales and 10% of van gross sales have to be electrical this yr. Regardless of a document 56,362 battery electrical automobile (BEV) registrations in September, BEVs account for simply 17.8% of the market this yr, a determine anticipated to rise to 18.5% by the yr’s finish—nonetheless shy of the federal government’s goal.
The SMMT famous that personal demand for electrical autos is down 6.3% year-to-date, at the same time as producers have provided unprecedented reductions to drive gross sales. These value cuts are anticipated to price the trade over £2 billion by the tip of 2023. Though petrol and diesel automobile gross sales proceed to say no, they nonetheless signify the selection of 56.4% of consumers in September.
To stimulate EV uptake, the SMMT has known as for a 50% VAT discount on new electrical automobile purchases, a measure it estimates might price the Treasury £7.7 billion by the tip of 2026. Moreover, the trade physique is advocating for VAT on public charging factors to be lowered to five%, consistent with the speed utilized to dwelling charging. They’ve additionally requested that the federal government introduce necessary infrastructure targets for charging factors to assist the rising fleet of electrical autos on UK roads.
The SMMT has additionally really useful delaying the introduction of street tax for EVs, at the moment set to start subsequent yr, and lengthening the subsidy for industrial electrical vans past its deliberate finish in March.
This push for VAT reductions and prolonged subsidies comes as the worldwide EV market faces challenges. Producers like Volvo, Ford, and Toyota have scaled again their EV ambitions, with Toyota saying delays to US EV manufacturing and Tesla lacking its quarterly supply targets. Governments throughout Europe are additionally scaling again their assist for the sector, with France chopping EV subsidies for higher-income consumers by 20%, and Germany ending its subsidy programme altogether.
Whereas the UK has ended most grants for electrical automobile purchases, enterprise consumers can nonetheless profit from tax incentives for EVs used as firm automobiles. Nonetheless, trade leaders are warning that with out additional authorities intervention, the market could wrestle to fulfill its formidable targets for zero-emission autos.
