Calls for tax rethink even as EV sales buck market decline
Registrations of new electric cars rose again in January, bucking an overall decline in the new car market.
Overall, new car registrations were down 2.5% compared with January 2024, but EVs recorded a 41% year-on-year increase, with 29,634 vehicles registered.
The latest figures from the Society of Motor Manufacturers and Traders (SMMT) show that EVs accounted for 21.3% of the new car market less month – still below the 2024 ZEV mandate threshold and some way off the 28% required by the end of this year.
The industry body called for more government support, including the scrapping of planned tax changes, to encourage further rapid uptake among private buyers.
It noted: “This gap between demand and ambition is why the review of the Vehicle Emissions Trading Scheme and its flexibilities is essential and must deliver meaningful changes urgently, else there will likely be significant negative consequences for the market, industry and, potentially, the consumer.”
It also called for a rethink of the impending tax changes that will see all new EVs priced at more than £40,000 become liable for the £410 per year Expensive Car Supplement. The threshold hasn’t changed since it was introduced in 2008, despite radical shifts in new car pricing.
Mike Hawes, SMMT chief executive commented: “January’s figures show EV demand is growing – but not fast enough to deliver on current ambitions.
“Affordability remains a major barrier to uptake, hence the need for compelling measures to boost demand, and not just from manufacturers. The application, therefore, of the ‘Expensive Car Supplement’ to VED on electric vehicles is the wrong measure at the wrong time.
“Rather than penalising EV buyers, we should be taking every step to encourage more drivers to make the switch, helping meet government, industry and societal climate change goals.”
In recent weeks it has been rumoured that the government is considering new subsidies to support low-interest loans for private buyers opting for an electric car.
Philip Nothard, insight director, Cox Automotive echoed the SMMT’s calls for the government to carefully consider its approach to incentives and tax. He commented: “While EV adoption maintains steady growth, private buyers remain cautious. This highlights the pressing need for significant support and incentives to accelerate adoption, especially as new consumer data from Cox Automotive and Regit highlights that 86% of drivers don’t think there are sufficient incentives to support EV adoption in the UK.
“With ambitious EV targets ahead, there is concern that upcoming tax changes could slow progress at a critical time. A balanced approach to taxation and incentives will maintain momentum and ensure the UK remains on track for a successful transition to electrified mobility. “