As the October Budget looms, the UK EV sector is eagerly awaiting news of potential government interventions that could accelerate the transition to cleaner transport. Despite a record high in overall EV sales for September 2024, the critical private buyer segment is lagging behind, raising concerns for car manufacturers.
Ford UK, one of the country’s key players, has publicly called on the government to introduce more aggressive measures to encourage EV adoption. Lisa Brankin, the Head of Ford UK, is leading the charge, suggesting that without further government support, the shift to electric may fall short of its targets. Her key proposal? A reduction in the VAT rate on electric vehicles.
Currently, EVs in the UK are subject to the same 20% VAT as traditional petrol and diesel cars, making them less affordable for the average consumer. Ford’s proposal is to cut that rate in half to 10%, potentially saving buyers thousands on a new electric car. For example, on a £40,000 EV, a 10% VAT cut could reduce the price by as much as £4,000! a substantial incentive for price-sensitive private buyers.
Brankin has stressed the importance of this measure in revitalising private EV sales, stating, “There just isn’t customer demand to meet the objectives. If it’s going to be a success, we need intervention and the Government to do something.” This plea is particularly poignant given the removal of previous incentives, such as the Plug-in Car Grant, which was phased out in June 2022 after offering up to £5,000 off the cost of new EVs.
The slowing pace of private sales is concerning. While businesses and fleet operators continue to buy electric cars at a healthy rate, private drivers have been slower to follow suit. Many potential buyers are deterred by the higher upfront costs of EVs, despite their long-term savings in fuel and maintenance. The proposed VAT cut could bridge that gap and help overcome what remains one of the key barriers to mass EV adoption: affordability.
But the VAT cut isn’t the only potential measure that could emerge in the upcoming Budget. The industry is also pushing for more investment in charging infrastructure, particularly in urban areas where home charging is less feasible. Without convenient and reliable charging options, many prospective EV owners are still hesitant to make the switch.
Additionally, extending the range of models eligible for incentives, or reinstating grants for vehicles over £40,000, could provide a much-needed boost to the premium EV market. Such policies would encourage wider adoption across different income brackets and help manufacturers meet stringent emission reduction targets set by the government.
The October Budget presents a pivotal moment for the UK’s electric vehicle industry. With manufacturers like Ford calling for decisive action, all eyes will be on the Chancellor to see if he delivers the kind of support that could finally accelerate EV adoption across the mass market. The future of the UK’s green transport revolution may well depend on it.
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John is the Editor and Spokesperson for Electric Car Guide.
With over 20 years of writing experience, he has written for titles such as City AM, FE News and NerdWallet.com, covering various automotive and personal finance topics.
John’s market commentary has been covered by the likes of The Express, The Independent, Yahoo Finance and The Evening Standard.
