The motor industry urged the chancellor on Tuesday to reduce the VAT rate for new electric vehicles, as well as public charging stations to stop the decline in the electric vehicle sector.
The Society of Motor Manufacturers and Traders, (SMMT), wrote an open letter addressed to the chancellor stating that the EV market share was “barely changing” and that it is likely that car manufacturers will miss the government targets for zero emission vehicle sales. According to the regulations, electric vehicles have to account for at least 22% of all new car sales in 2018 and 10% of all new van sales.
The figures released on Friday show that a record number of battery electric vehicles (BEVs) were registered in September. This has pushed their market share since the beginning of the year up to 17.8 percent, and 18.5 percent — still below government mandate — is forecast for the end of the calendar year. Volvo, Ford, and Toyota are among the major carmakers that have reduced their electric vehicle ambitions
According to the SMMT however, the demand for private BEVs is still down 6.3% year to date, despite the “unprecedented discounting” by manufacturers that will cost them more than £2 billion before the year ends. While petrol and diesel registrations fell by 9.2 percent and 7.1 cent, respectively, they still accounted for 56.4% of all buyers in September.
The letter from the industry group called for a VAT cut of half on all new electric vehicle purchases for the next three year period. This, according to the trade body, could cost the public purse about £7.7billion by the end 2026. The government also mandated infrastructure targets for charging stations, just as it does with EV sales.
The industry group said the government should delay the imposition on road tax for EVs that was set to begin next year and extend the subsidies for commercial electric vans due to expire in March. The sales of EVs worldwide have been slowed down after manufacturers overestimated the demand for new electric cars, and cash-strapped government have withdrawn subsidies.
In an effort to alleviate its budget crisis, Germany ended its subsidy program for electric cars abruptly in December last year. In the UK, most grants for electric vehicles will be discontinued in 2022. However, those who purchase an EV as a corporate car through their business can still take advantage of some tax incentives.
In recent months, many of the world’s leading automakers have scaled back their EV plans. This includes Volvo, Ford and Toyota. Tesla’s quarterly results missed Wall Street expectations on Wednesday, putting the leading EV manufacturer at risk of its annual delivery falling for the first time.
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