Thursday 5 March 2020 1:50 pm

Car industry calls for electric vehicle tax break as new sales decline

The Society of Motor Manufacturers and Traders (SMMT) has called for a tax break on all new battery electric, plug-in hybrid electric and hydrogen fuel cell electric cars in order to encourage the take up of more environmentally friendly models in the UK.

According to the SMMT, cutting VAT on such models would reduce the purchase price of the average family battery electric car by £5,600, and could increase sales to just under one million between now and 2024.

Read more: Chinese passenger car sales fall 80 per cent in February

Mike Hawes, the SMMT’s chief executive, said: “Next week’s Budget is the Chancellor’s opportunity to reverse this trend by restoring confidence to the market and showing that government is serious about delivering on its environmental ambitions.

“Industry has invested in the technology, with a huge influx of new zero- and ultra-low emission models coming to market in 2020, and we now need government to match this with a comprehensive package of incentives and infrastructure spending to accelerate demand”.

The calls came as the SMMT reported that the UK’s new car market declined 2.9 per cent last month to 79,594 registrations, with the decline driven primarily by weak consumer confidence and uncertainty over what fuel technology to buy.

Demand for both diesel and petrol cars fell in the month, with registrations down 27.1 per cent and 7.3 per cent respectively, and diesel now accounting for just over a fifth of sales – 21.9 per cent.

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Although 4,566 new electric vehicles joined Britain’s roads, market share for the new models rose to 5.8 per cent.

Commenting on today’s figures, Barclays’ head of retail and wholesale Karen Johnson said: “February’s car registration figures show that consumer confidence continues to look a little shaky, with many still holding off when it comes to spending on big ticket items. 

“That said, the case could be made that some were holding off until this month for the all-important March number plate change.   

“Albeit from a low base, growth in the hybrid and electric market is contrastingly positive, although unsurprising given the Government’s recent announcement on their infrastructure investment fund and the continuing environmental focus of many UK buyers”.

Michael Woodward, UK automotive lead at Deloitte, said: “The key to maintaining growth of EVs will be investment in the supporting infrastructure.

Read more: Global car sales set to fall in 2020 as coronavirus fears grip

“Where consumers were once deterred by battery range anxiety, this has now shifted to charging anxiety with access to charging now being seen as the biggest barrier to buying a full EV for UK customers.

“Manufacturers are doing their part by bringing new models to the market and adding range to batteries. What consumers need now is clarity on joined-up, long-term infrastructure development and continued financial incentives could be key to future EV growth.”